ERP OPERATING LTD PARTNERSHIP 10-Q

10-Q Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-12252 (Equity Residential) Commission File Number: 0-24920 (ERP Operating Limited Partnership) EQUITY RESIDENTIAL ERP OPERATING LIMITED PARTNERSHIP ( Exact name of registrant as specified in its charter) Maryland (Equity Residential) 13-3675988 (Equity Residential) Illinois (ERP Operating Limited Partnership) 36-3894853 (ERP Operating Limited Partnership) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Two North Riverside Plaza , Chicago , Illinois 60606 ( 312 ) 474-1300 (Address of principal executive offices) (Zip Code) (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Shares of Beneficial Interest, $0.01 Par Value (Equity Residential) EQR New York Stock Exchange 7.57% Notes due August 15, 2026 (ERP Operating Limited Partnership) N/A New York Stock Exchange Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Equity Residential Yes ☒ No ☐ ERP Operating Limited Partnership Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Equity Residential Yes ☒ No ☐ ERP Operating Limited Partnership Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Equity Residential: Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ l ERP Operating Limited Partnership: Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Equity Residential ☐ ERP Operating Limited Partnership ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Equity Residential Yes ☐ No ☒ ERP Operating Limited Partnership Yes ☐ No ☒ The number of EQR Common Shares of Beneficial Interest, $0.01 par value, outstanding on October 21, 2022 was 377,918,920 . Table of Contents EXPLANATORY NOTE This report combines the reports on Form 10-Q for the quarterly period ended September 30, 2022 of Equity Residential and ERP Operating Limited Partnership. Unless stated otherwise or the context otherwise requires, references to “EQR” mean Equity Residential, a Maryland real estate investment trust (“REIT”), and references to “ERPOP” mean ERP Operating Limited Partnership, an Illinois limited partnership. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. The following chart illustrates the Company’s and the Operating Partnership’s corporate structure: EQR is the general partner of, and as of September 30, 2022 owned an approximate 96.7% ownership interest in, ERPOP. The remaining 3.3% interest is owned by limited partners. As the sole general partner of ERPOP, EQR has exclusive control of ERPOP’s day-to-day management. Management operates the Company and the Operating Partnership as one business. The management of EQR consists of the same members as the management of ERPOP. The Company is structured as an umbrella partnership REIT (“UPREIT”) and EQR contributes all net proceeds from its various equity offerings to ERPOP. In return for those contributions, EQR receives a number of OP Units (see definition below) in ERPOP equal to the number of Common Shares it has issued in the equity offering. The Company may acquire properties in transactions that include the issuance of OP Units as consideration for the acquired properties. Such transactions may, in certain circumstances, enable the sellers to defer in whole or in part, the recognition of taxable income or gain that might otherwise result from the sales. This is one of the reasons why the Company is structured in the manner shown above. Based on the terms of ERPOP’s partnership agreement, OP Units can be exchanged with Common Shares on a one-for-one basis because the Company maintains a one-for-one relationship between the OP Units of ERPOP issued to EQR and the outstanding Common Shares. The Company believes that combining the reports on Form 10-Q of EQR and ERPOP into this single report provides the following benefits: • enhances investors’ understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; • eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and • creates time and cost efficiencies through the preparation of one combined report instead of two separate reports. Table of Contents The Company believes it is important to understand the few differences between EQR and ERPOP in the context of how EQR and ERPOP operate as a consolidated company. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR’s primary function is acting as the general partner of ERPOP. EQR also issues equity from time to time, the net proceeds of which it is obligated to contribute to ERPOP. EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by EQR (which are contributed to the capital of ERPOP in exchange for additional partnership interests in ERPOP (“OP Units”) (on a one-for-one Common Share per OP Unit basis) or additional preference units in ERPOP (on a one-for-one preferred share per preference unit basis)), the Operating Partnership generates all remaining capital required by the Company’s business. These sources include the Operating Partnership’s working capital, net cash provided by operating activities, borrowings under its revolving credit facility and/or commercial paper program, the issuance of secured and unsecured debt and partnership interests, and proceeds received from disposition of certain properties and joint venture interests. Shareholders’ equity, partners’ capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The limited partners of the Operating Partnership are accounted for as partners’ capital in the Operating Partnership’s financial statements and as noncontrolling interests in the Company’s financial statements. The noncontrolling interests in the Operating Partnership’s financial statements include the interests of unaffiliated partners in various consolidated partnerships. The noncontrolling interests in the Company’s financial statements include the same noncontrolling interests at the Operating Partnership level and limited partner OP Unit holders of the Operating Partnership. The differences between shareholders’ equity and partners’ capital result from differences in the equity issued at the Company and Operating Partnership levels. To help investors understand the differences between the Company and the Operating Partnership, this report provides separate consolidated financial statements for the Company and the Operating Partnership; a single set of consolidated notes to such financial statements that includes separate discussions of each entity’s debt, noncontrolling interests and shareholders’ equity or partners’ capital, as applicable; and a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity. This report also includes separate Part I, Item 4, Controls and Procedures , sections and separate Exhibits 31 and 32 certifications for each of the Company and the Operating Partnership in order to establish that the requisite certifications have been made and that the Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350. In order to highlight the differences between the Company and the Operating Partnership, the separate sections in this report for the Company and the Operating Partnership specifically refer to the Company and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the Company is one business and the Company operates that business through the Operating Partnership. As general partner with control of ERPOP, EQR consolidates ERPOP for financial reporting purposes, and EQR essentially has no assets or liabilities other than its investment in ERPOP. Therefore, the assets and liabilities of the Company and the Operating Partnership are the same on their respective financial statements. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company. Table of Contents TABLE OF CONTENTS PAGE PART I. Item 1. Financial Statements of Equity Residential: Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 2 Consolidated Statements of Operations and Comprehensive Income for the nine months and quarters ended September 30, 2022 and 2021 3 Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 5 Consolidated Statements of Changes in Equity for the nine months and quarters ended September 30, 2022 and 2021 8 Financial Statements of ERP Operating Limited Partnership : Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 10 Consolidated Statements of Operations and Comprehensive Income for the nine months and quarters ended September 30, 2022 and 2021 11 Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 13 Consolidated Statements of Changes in Capital for the nine months and quarters ended September 30, 2022 and 2021 16 Notes to Consolidated Financial Statements of Equity Residential and ERP Operating Limited Partnership 18 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 Item 3. Quantitative and Qualitative Disclosures about Market Risk 46 Item 4. Controls and Procedures 46 PART II. Item 1. Legal Proceedings 47 Item 1A. Risk Factors 47 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 47 Item 3. Defaults Upon Senior Securities 47 Item 4. Mine Safety Disclosures 47 Item 5. Other Information 47 Item 6. Exhibits 47 1 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED B ALANCE SHEETS (Amounts in thousands except for share amounts) (Unaudited) September 30, December 31, 2022 2021 ASSETS Land $ 5,580,878 $ 5,814,790 Depreciable property 22,251,673 22,370,811 Projects under development 89,347 24,307 Land held for development 60,165 62,998 Investment in real estate 27,982,063 28,272,906 Accumulated depreciation ( 8,813,578 ) ( 8,354,282 ) Investment in real estate, net 19,168,485 19,918,624 Investments in unconsolidated entities 256,311 127,448 Cash and cash equivalents 44,788 123,832 Restricted deposits 76,679 236,404 Right-of-use assets 465,814 474,713 Other assets 253,328 288,220 Total assets $ 20,265,405 $ 21,169,241 LIABILITIES AND EQUITY Liabilities: Mortgage notes payable, net $ 1,967,827 $ 2,191,201 Notes, net 5,340,807 5,835,222 Line of credit and commercial paper 189,557 315,030 Accounts payable and accrued expenses 175,843 107,013 Accrued interest payable 49,652 69,510 Lease liabilities 309,548 312,335 Other liabilities 287,955 353,102 Security deposits 69,247 66,141 Distributions payable 242,695 233,502 Total liabilities 8,633,131 9,483,056 Commitments and contingencies Redeemable Noncontrolling Interests – Operating Partnership 370,537 498,977 Equity: Shareholders' equity: Preferred Shares of beneficial interest, $ 0.01 par value; 100,000,000 shares authorized; 745,600 shares issued and outstanding as of September 30, 2022 and December 31, 2021 37,280 37,280 Common Shares of beneficial interest, $ 0.01 par value; 1,000,000,000 shares authorized; 376,169,253 shares issued and outstanding as of September 30, 2022 and 375,527,195 shares issued and outstanding as of December 31, 2021 3,762 3,755 Paid in capital 9,267,450 9,121,122 Retained earnings 1,737,107 1,827,063 Accumulated other comprehensive income (loss) ( 872 ) ( 34,272 ) Total shareholders’ equity 11,044,727 10,954,948 Noncontrolling Interests: Operating Partnership 218,577 214,094 Partially Owned Properties ( 1,567 ) 18,166 Total Noncontrolling Interests 217,010 232,260 Total equity 11,261,737 11,187,208 Total liabilities and equity $ 20,265,405 $ 21,169,241 See accompanying notes 2 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF O PERATIONS AND COMPREHENSIVE INCOME (Amounts in thousands except per share data) (Unaudited) Nine Months Ended September 30, Quarter Ended September 30, 2022 2021 2022 2021 REVENUES Rental income $ 2,035,477 $ 1,818,867 $ 695,099 $ 623,206 EXPENSES Property and maintenance 365,277 341,261 124,048 116,461 Real estate taxes and insurance 302,899 297,780 100,361 96,909 Property management 83,035 74,357 25,729 23,772 General and administrative 47,033 43,102 13,372 13,041 Depreciation 667,896 616,032 214,129 215,397 Total expenses 1,466,140 1,372,532 477,639 465,580 Net gain (loss) on sales of real estate properties 304,346 587,623 196,551 363,928 Operating income 873,683 1,033,958 414,011 521,554 Interest and other income 4,844 25,293 720 973 Other expenses ( 9,191 ) ( 10,908 ) ( 3,755 ) ( 3,456 ) Interest: Expense incurred, net ( 217,093 ) ( 202,733 ) ( 72,412 ) ( 68,251 ) Amortization of deferred financing costs ( 6,421 ) ( 6,172 ) ( 2,220 ) ( 2,048 ) Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels 645,822 839,438 336,344 448,772 Income and other tax (expense) benefit ( 725 ) ( 679 ) ( 152 ) ( 284 ) Income (loss) from investments in unconsolidated entities ( 3,456 ) ( 3,028 ) ( 1,027 ) ( 1,156 ) Net gain (loss) on sales of land parcels — 5 — — Net income 641,641 835,736 335,165 447,332 Net (income) loss attributable to Noncontrolling Interests: Operating Partnership ( 21,024 ) ( 27,903 ) ( 10,997 ) ( 14,847 ) Partially Owned Properties ( 2,726 ) ( 1,957 ) ( 1,143 ) ( 534 ) Net income attributable to controlling interests 617,891 805,876 323,025 431,951 Preferred distributions ( 2,318 ) ( 2,318 ) ( 773 ) ( 773 ) Net income available to Common Shares $ 615,573 $ 803,558 $ 322,252 $ 431,178 Earnings per share – basic: Net income available to Common Shares $ 1.64 $ 2.15 $ 0.86 $ 1.15 Weighted average Common Shares outstanding 375,710 373,474 375,850 374,308 Earnings per share – diluted: Net income available to Common Shares $ 1.63 $ 2.14 $ 0.86 $ 1.15 Weighted average Common Shares outstanding 389,394 387,642 389,300 388,374 See accompanying notes 3 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF OPERATIO NS AND COMPREHENSIVE INCOME (Continued) (Amounts in thousands except per share data) (Unaudited) Nine Months Ended September 30, Quarter Ended September 30, 2022 2021 2022 2021 Comprehensive income: Net income $ 641,641 $ 835,736 $ 335,165 $ 447,332 Other comprehensive income (loss): Other comprehensive income (loss) – derivative instruments: Unrealized holding gains (losses) arising during the period 23,413 — 24,672 — Losses reclassified into earnings from other comprehensive income 9,987 7,000 5,106 2,363 Other comprehensive income (loss) 33,400 7,000 29,778 2,363 Comprehensive income 675,041 842,736 364,943 449,695 Comprehensive (income) attributable to Noncontrolling Interests ( 24,853 ) ( 30,100 ) ( 13,123 ) ( 15,459 ) Comprehensive income attributable to controlling interests $ 650,188 $ 812,636 $ 351,820 $ 434,236 See accompanying notes 4 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED STATEM ENTS OF CASH FLOWS (Amounts in thousands) (Unaudited) Nine Months Ended September 30, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 641,641 $ 835,736 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 667,896 616,032 Amortization of deferred financing costs 6,421 6,172 Amortization of above/below market lease intangibles — ( 154 ) Amortization of discounts and premiums on debt 4,123 3,934 Amortization of deferred settlements on derivative instruments 9,978 6,991 Amortization of right-of-use assets 9,123 10,286 Write-off of pursuit costs 3,296 3,557 (Income) loss from investments in unconsolidated entities 3,456 3,028 Distributions from unconsolidated entities – return on capital 251 — Net (gain) loss on sales of real estate properties ( 304,346 ) ( 587,623 ) Net (gain) loss on sales of land parcels — ( 5 ) Realized (gain) loss on sale of investment securities ( 2,061 ) ( 23,432 ) Compensation paid with Company Common Shares 24,559 21,919 Changes in assets and liabilities: (Increase) decrease in other assets 20,734 16,269 Increase (decrease) in accounts payable and accrued expenses 76,274 69,170 Increase (decrease) in accrued interest payable ( 19,858 ) ( 9,119 ) Increase (decrease) in lease liabilities ( 1,166 ) ( 4,112 ) Increase (decrease) in other liabilities ( 23,199 ) 5,427 Increase (decrease) in security deposits 3,106 4,137 Net cash provided by operating activities 1,120,228 978,213 CASH FLOWS FROM INVESTING ACTIVITIES: Investment in real estate – acquisitions ( 113,046 ) ( 1,022,275 ) Investment in real estate – development/other ( 81,889 ) ( 172,850 ) Capital expenditures to real estate ( 141,707 ) ( 107,706 ) Non-real estate capital additions ( 2,232 ) ( 1,251 ) Interest capitalized for real estate and unconsolidated entities under development ( 4,181 ) ( 12,365 ) Proceeds from disposition of real estate, net 720,302 1,014,328 Investments in unconsolidated entities – acquisitions ( 49,330 ) ( 21,787 ) Investments in unconsolidated entities – development/other ( 87,129 ) ( 9,294 ) Distributions from unconsolidated entities – return of capital 9 4 Purchase of investment securities and other investments ( 1,045 ) ( 167,791 ) Proceeds from sale of investment securities 3,584 191,398 Net cash provided by (used for) investing activities 243,336 ( 309,589 ) See accompanying notes 5 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Amounts in thousands) (Unaudited) Nine Months Ended September 30, 2022 2021 CASH FLOWS FROM FINANCING ACTIVITIES: Debt financing costs $ ( 373 ) $ ( 6,447 ) Mortgage notes payable, net: Proceeds 37,429 51,298 Lump sum payoffs ( 260,874 ) ( 59,880 ) Scheduled principal repayments ( 3,186 ) ( 5,570 ) Notes, net: Proceeds — 497,470 Lump sum payoffs ( 500,000 ) — Line of credit and commercial paper: Commercial paper proceeds 5,140,685 4,305,170 Commercial paper repayments ( 5,266,158 ) ( 4,690,000 ) Finance ground lease principal payments ( 1,845 ) ( 349 ) Proceeds from Employee Share Purchase Plan (ESPP) 3,280 3,455 Proceeds from exercise of options 21,021 68,807 Payment of offering costs ( 739 ) ( 267 ) Other financing activities, net ( 31 ) ( 31 ) Acquisition of Noncontrolling Interests – Partially Owned Properties ( 32,178 ) — Contributions – Noncontrolling Interests – Partially Owned Properties 603 — Contributions – Noncontrolling Interests – Operating Partnership 1 — Distributions: Common Shares ( 696,679 ) ( 674,531 ) Preferred Shares ( 2,318 ) ( 2,318 ) Noncontrolling Interests – Operating Partnership ( 22,735 ) ( 23,949 ) Noncontrolling Interests – Partially Owned Properties ( 18,236 ) ( 4,461 ) Net cash provided by (used for) financing activities ( 1,602,333 ) ( 541,603 ) Net increase (decrease) in cash and cash equivalents and restricted deposits ( 238,769 ) 127,021 Cash and cash equivalents and restricted deposits, beginning of period 360,236 99,728 Cash and cash equivalents and restricted deposits, end of period $ 121,467 $ 226,749 Cash and cash equivalents and restricted deposits, end of period Cash and cash equivalents $ 44,788 $ 39,707 Restricted deposits 76,679 187,042 Total cash and cash equivalents and restricted deposits, end of period $ 121,467 $ 226,749 See accompanying notes 6 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Amounts in thousands) (Unaudited) Nine Months Ended September 30, 2022 2021 SUPPLEMENTAL INFORMATION: Cash paid for interest, net of amounts capitalized $ 221,218 $ 199,799 Net cash paid (received) for income and other taxes $ 728 $ 1,040 Amortization of deferred financing costs: Investment in real estate, net $ ( 380 ) $ ( 227 ) Other assets $ 1,754 $ 1,754 Mortgage notes payable, net $ 1,620 $ 1,702 Notes, net $ 3,427 $ 2,943 Amortization of discounts and premiums on debt: Mortgage notes payable, net $ 1,865 $ 2,069 Notes, net $ 2,258 $ 1,865 Amortization of deferred settlements on derivative instruments: Other liabilities $ ( 9 ) $ ( 9 ) Accumulated other comprehensive income $ 9,987 $ 7,000 Write-off of pursuit costs: Investment in real estate, net $ 948 $ 3,000 Investments in unconsolidated entities $ 2,197 $ — Other assets $ 151 $ 533 Accounts payable and accrued expenses $ — $ 24 (Income) loss from investments in unconsolidated entities: Investments in unconsolidated entities $ 2,517 $ 2,062 Other liabilities $ 939 $ 966 Realized/unrealized (gain) loss on derivative instruments: Other assets $ ( 23,413 ) $ — Accumulated other comprehensive income $ 23,413 $ — Interest capitalized for real estate and unconsolidated entities under development: Investment in real estate, net $ ( 1,312 ) $ ( 12,260 ) Investments in unconsolidated entities $ ( 2,869 ) $ ( 105 ) Investments in unconsolidated entities – development/other: Investment in real estate, net $ — $ 967 Investments in unconsolidated entities $ ( 85,839 ) $ ( 8,251 ) Other liabilities $ ( 1,290 ) $ ( 2,010 ) Debt financing costs: Other assets $ ( 45 ) $ 228 Mortgage notes payable, net $ ( 228 ) $ ( 2,344 ) Notes, net $ ( 100 ) $ ( 4,331 ) Right-of-use assets and lease liabilities initial measurement and reclassifications: Right-of-use assets $ ( 224 ) $ 11,308 Lease liabilities $ 224 $ ( 11,308 ) Non-cash share distribution and other transfers from unconsolidated entities: Investments in unconsolidated entities $ 4,201 $ 1,430 Other assets $ ( 4,201 ) $ ( 1,430 ) See accompanying notes 7 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED STATEMENT S OF CHANGES IN EQUITY (Amounts in thousands except per share data) (Unaudited) Nine Months Ended September 30, Quarter Ended September 30, 2022 2021 2022 2021 SHAREHOLDERS’ EQUITY PREFERRED SHARES Balance, beginning of period $ 37,280 $ 37,280 $ 37,280 $ 37,280 Balance, end of period $ 37,280 $ 37,280 $ 37,280 $ 37,280 COMMON SHARES, $ 0.01 PAR VALUE Balance, beginning of period $ 3,755 $ 3,723 $ 3,761 $ 3,744 Conversion of OP Units into Common Shares — 11 — — Exercise of share options 4 14 — 6 Employee Share Purchase Plan (ESPP) 1 1 1 — Share-based employee compensation expense: Restricted shares 2 1 — — Balance, end of period $ 3,762 $ 3,750 $ 3,762 $ 3,750 PAID IN CAPITAL Balance, beginning of period $ 9,121,122 $ 9,128,599 $ 9,229,738 $ 9,110,121 Common Share Issuance: Conversion of OP Units into Common Shares 1,680 68,246 196 1,597 Exercise of share options 21,017 68,793 2,093 29,178 Employee Share Purchase Plan (ESPP) 3,279 3,454 901 788 Share-based employee compensation expense: Restricted shares 9,524 6,571 2,165 1,758 Share options 1,856 2,541 466 565 ESPP discount 637 798 217 165 Offering costs ( 739 ) ( 267 ) ( 252 ) ( 267 ) Supplemental Executive Retirement Plan (SERP) ( 269 ) ( 1,335 ) — 722 Acquisition of Noncontrolling Interests – Partially Owned Properties ( 27,383 ) — ( 28 ) — Change in market value of Redeemable Noncontrolling Interests – Operating Partnership 127,570 ( 119,237 ) 29,430 ( 17,271 ) Adjustment for Noncontrolling Interests ownership in Operating Partnership 9,156 ( 27,085 ) 2,524 3,722 Balance, end of period $ 9,267,450 $ 9,131,078 $ 9,267,450 $ 9,131,078 RETAINED EARNINGS Balance, beginning of period $ 1,827,063 $ 1,399,715 $ 1,649,960 $ 1,321,875 Net income attributable to controlling interests 617,891 805,876 323,025 431,951 Common Share distributions ( 705,529 ) ( 676,158 ) ( 235,105 ) ( 225,938 ) Preferred Share distributions ( 2,318 ) ( 2,318 ) ( 773 ) ( 773 ) Balance, end of period $ 1,737,107 $ 1,527,115 $ 1,737,107 $ 1,527,115 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Balance, beginning of period $ ( 34,272 ) $ ( 43,666 ) $ ( 30,650 ) $ ( 39,029 ) Accumulated other comprehensive income (loss) – derivative instruments: Unrealized holding gains (losses) arising during the period 23,413 — 24,672 — Losses reclassified into earnings from other comprehensive income 9,987 7,000 5,106 2,363 Balance, end of period $ ( 872 ) $ ( 36,666 ) $ ( 872 ) $ ( 36,666 ) DISTRIBUTIONS Distributions declared per Common Share outstanding $ 1.875 $ 1.8075 $ 0.625 $ 0.6025 See accompanying notes 8 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued) (Amounts in thousands except per share data) (Unaudited) Nine Months Ended September 30, Quarter Ended September 30, 2022 2021 2022 2021 NONCONTROLLING INTERESTS OPERATING PARTNERSHIP Balance, beginning of period $ 214,094 $ 233,162 $ 216,326 $ 205,691 Issuance of restricted units to Noncontrolling Interests 1 — — — Conversion of OP Units held by Noncontrolling Interests into OP Units held by General Partner ( 1,680 ) ( 68,257 ) ( 196 ) ( 1,597 ) Equity compensation associated with Noncontrolling Interests 16,502 14,173 3,343 3,642 Net income attributable to Noncontrolling Interests 21,024 27,903 10,997 14,847 Distributions to Noncontrolling Interests ( 23,078 ) ( 23,366 ) ( 7,590 ) ( 7,367 ) Change in carrying value of Redeemable Noncontrolling Interests – Operating Partnership 870 ( 1,745 ) ( 1,779 ) ( 2,539 ) Adjustment for Noncontrolling Interests ownership in Operating Partnership ( 9,156 ) 27,085 ( 2,524 ) ( 3,722 ) Balance, end of period $ 218,577 $ 208,955 $ 218,577 $ 208,955 PARTIALLY OWNED PROPERTIES Balance, beginning of period $ 18,166 $ 4,673 $ ( 1,734 ) $ 2,365 Net income attributable to Noncontrolling Interests 2,726 1,957 1,143 534 Contributions by Noncontrolling Interests 603 — — — Distributions to Noncontrolling Interests ( 18,267 ) ( 4,492 ) ( 1,004 ) ( 761 ) Acquisition of Noncontrolling Interests – Partially Owned Properties ( 4,795 ) — 28 — Balance, end of period $ ( 1,567 ) $ 2,138 $ ( 1,567 ) $ 2,138 See accompanying notes 9 Table of Contents ERP OPERATING LI MITED PARTNERSHIP CONSOLIDATED B ALANCE SHEETS (Amounts in thousands) (Unaudited) September 30, December 31, 2022 2021 ASSETS Land $ 5,580,878 $ 5,814,790 Depreciable property 22,251,673 22,370,811 Projects under development 89,347 24,307 Land held for development 60,165 62,998 Investment in real estate 27,982,063 28,272,906 Accumulated depreciation ( 8,813,578 ) ( 8,354,282 ) Investment in real estate, net 19,168,485 19,918,624 Investments in unconsolidated entities 256,311 127,448 Cash and cash equivalents 44,788 123,832 Restricted deposits 76,679 236,404 Right-of-use assets 465,814 474,713 Other assets 253,328 288,220 Total assets $ 20,265,405 $ 21,169,241 LIABILITIES AND CAPITAL Liabilities: Mortgage notes payable, net $ 1,967,827 $ 2,191,201 Notes, net 5,340,807 5,835,222 Line of credit and commercial paper 189,557 315,030 Accounts payable and accrued expenses 175,843 107,013 Accrued interest payable 49,652 69,510 Lease liabilities 309,548 312,335 Other liabilities 287,955 353,102 Security deposits 69,247 66,141 Distributions payable 242,695 233,502 Total liabilities 8,633,131 9,483,056 Commitments and contingencies Redeemable Limited Partners 370,537 498,977 Capital: Partners’ Capital: Preference Units 37,280 37,280 General Partner 11,008,319 10,951,940 Limited Partners 218,577 214,094 Accumulated other comprehensive income (loss) ( 872 ) ( 34,272 ) Total partners’ capital 11,263,304 11,169,042 Noncontrolling Interests – Partially Owned Properties ( 1,567 ) 18,166 Total capital 11,261,737 11,187,208 Total liabilities and capital $ 20,265,405 $ 21,169,241 See accompanying notes 10 Table of Contents ERP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERA TIONS AND COMPREHENSIVE INCOME (Amounts in thousands except per Unit data) (Unaudited) Nine Months Ended September 30, Quarter Ended September 30, 2022 2021 2022 2021 REVENUES Rental income $ 2,035,477 $ 1,818,867 $ 695,099 $ 623,206 EXPENSES Property and maintenance 365,277 341,261 124,048 116,461 Real estate taxes and insurance 302,899 297,780 100,361 96,909 Property management 83,035 74,357 25,729 23,772 General and administrative 47,033 43,102 13,372 13,041 Depreciation 667,896 616,032 214,129 215,397 Total expenses 1,466,140 1,372,532 477,639 465,580 Net gain (loss) on sales of real estate properties 304,346 587,623 196,551 363,928 Operating income 873,683 1,033,958 414,011 521,554 Interest and other income 4,844 25,293 720 973 Other expenses ( 9,191 ) ( 10,908 ) ( 3,755 ) ( 3,456 ) Interest: Expense incurred, net ( 217,093 ) ( 202,733 ) ( 72,412 ) ( 68,251 ) Amortization of deferred financing costs ( 6,421 ) ( 6,172 ) ( 2,220 ) ( 2,048 ) Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels 645,822 839,438 336,344 448,772 Income and other tax (expense) benefit ( 725 ) ( 679 ) ( 152 ) ( 284 ) Income (loss) from investments in unconsolidated entities ( 3,456 ) ( 3,028 ) ( 1,027 ) ( 1,156 ) Net gain (loss) on sales of land parcels — 5 — — Net income 641,641 835,736 335,165 447,332 Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties ( 2,726 ) ( 1,957 ) ( 1,143 ) ( 534 ) Net income attributable to controlling interests $ 638,915 $ 833,779 $ 334,022 $ 446,798 ALLOCATION OF NET INCOME: Preference Units $ 2,318 $ 2,318 $ 773 $ 773 General Partner $ 615,573 $ 803,558 $ 322,252 $ 431,178 Limited Partners 21,024 27,903 10,997 14,847 Net income available to Units $ 636,597 $ 831,461 $ 333,249 $ 446,025 Earnings per Unit – basic: Net income available to Units $ 1.64 $ 2.15 $ 0.86 $ 1.15 Weighted average Units outstanding 387,603 385,841 387,745 386,327 Earnings per Unit – diluted: Net income available to Units $ 1.63 $ 2.14 $ 0.86 $ 1.15 Weighted average Units outstanding 389,394 387,642 389,300 388,374 See accompanying notes 11 Table of Contents ERP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIO NS AND COMPREHENSIVE INCOME (Continued) (Amounts in thousands except per Unit data) (Unaudited) Nine Months Ended September 30, Quarter Ended September 30, 2022 2021 2022 2021 Comprehensive income: Net income $ 641,641 $ 835,736 $ 335,165 $ 447,332 Other comprehensive income (loss): Other comprehensive income (loss) – derivative instruments: Unrealized holding gains (losses) arising during the period 23,413 — 24,672 — Losses reclassified into earnings from other comprehensive income 9,987 7,000 5,106 2,363 Other comprehensive income (loss) 33,400 7,000 29,778 2,363 Comprehensive income 675,041 842,736 364,943 449,695 Comprehensive (income) attributable to Noncontrolling Interests – Partially Owned Properties ( 2,726 ) ( 1,957 ) ( 1,143 ) ( 534 ) Comprehensive income attributable to controlling interests $ 672,315 $ 840,779 $ 363,800 $ 449,161 See accompanying notes 12 Table of Contents ERP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STA TEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited) Nine Months Ended September 30, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 641,641 $ 835,736 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 667,896 616,032 Amortization of deferred financing costs 6,421 6,172 Amortization of above/below market lease intangibles — ( 154 ) Amortization of discounts and premiums on debt 4,123 3,934 Amortization of deferred settlements on derivative instruments 9,978 6,991 Amortization of right-of-use assets 9,123 10,286 Write-off of pursuit costs 3,296 3,557 (Income) loss from investments in unconsolidated entities 3,456 3,028 Distributions from unconsolidated entities – return on capital 251 — Net (gain) loss on sales of real estate properties ( 304,346 ) ( 587,623 ) Net (gain) loss on sales of land parcels — ( 5 ) Realized (gain) loss on sale of investment securities ( 2,061 ) ( 23,432 ) Compensation paid with Company Common Shares 24,559 21,919 Changes in assets and liabilities: (Increase) decrease in other assets 20,734 16,269 Increase (decrease) in accounts payable and accrued expenses 76,274 69,170 Increase (decrease) in accrued interest payable ( 19,858 ) ( 9,119 ) Increase (decrease) in lease liabilities ( 1,166 ) ( 4,112 ) Increase (decrease) in other liabilities ( 23,199 ) 5,427 Increase (decrease) in security deposits 3,106 4,137 Net cash provided by operating activities 1,120,228 978,213 CASH FLOWS FROM INVESTING ACTIVITIES: Investment in real estate – acquisitions ( 113,046 ) ( 1,022,275 ) Investment in real estate – development/other ( 81,889 ) ( 172,850 ) Capital expenditures to real estate ( 141,707 ) ( 107,706 ) Non-real estate capital additions ( 2,232 ) ( 1,251 ) Interest capitalized for real estate and unconsolidated entities under development ( 4,181 ) ( 12,365 ) Proceeds from disposition of real estate, net 720,302 1,014,328 Investments in unconsolidated entities – acquisitions ( 49,330 ) ( 21,787 ) Investments in unconsolidated entities – development/other ( 87,129 ) ( 9,294 ) Distributions from unconsolidated entities – return of capital 9 4 Purchase of investment securities and other investments ( 1,045 ) ( 167,791 ) Proceeds from sale of investment securities 3,584 191,398 Net cash provided by (used for) investing activities 243,336 ( 309,589 ) See accompanying notes 13 Table of Contents ERP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Amounts in thousands) (Unaudited) Nine Months Ended September 30, 2022 2021 CASH FLOWS FROM FINANCING ACTIVITIES: Debt financing costs $ ( 373 ) $ ( 6,447 ) Mortgage notes payable, net: Proceeds 37,429 51,298 Lump sum payoffs ( 260,874 ) ( 59,880 ) Scheduled principal repayments ( 3,186 ) ( 5,570 ) Notes, net: Proceeds — 497,470 Lump sum payoffs ( 500,000 ) — Line of credit and commercial paper: Commercial paper proceeds 5,140,685 4,305,170 Commercial paper repayments ( 5,266,158 ) ( 4,690,000 ) Finance ground lease principal payments ( 1,845 ) ( 349 ) Proceeds from EQR’s Employee Share Purchase Plan (ESPP) 3,280 3,455 Proceeds from exercise of EQR options 21,021 68,807 Payment of offering costs ( 739 ) ( 267 ) Other financing activities, net ( 31 ) ( 31 ) Acquisition of Noncontrolling Interests – Partially Owned Properties ( 32,178 ) — Contributions – Noncontrolling Interests – Partially Owned Properties 603 — Contributions – Limited Partners 1 — Distributions: OP Units – General Partner ( 696,679 ) ( 674,531 ) Preference Units ( 2,318 ) ( 2,318 ) OP Units – Limited Partners ( 22,735 ) ( 23,949 ) Noncontrolling Interests – Partially Owned Properties ( 18,236 ) ( 4,461 ) Net cash provided by (used for) financing activities ( 1,602,333 ) ( 541,603 ) Net increase (decrease) in cash and cash equivalents and restricted deposits ( 238,769 ) 127,021 Cash and cash equivalents and restricted deposits, beginning of period 360,236 99,728 Cash and cash equivalents and restricted deposits, end of period $ 121,467 $ 226,749 Cash and cash equivalents and restricted deposits, end of period Cash and cash equivalents $ 44,788 $ 39,707 Restricted deposits 76,679 187,042 Total cash and cash equivalents and restricted deposits, end of period $ 121,467 $ 226,749 See accompanying notes 14 Table of Contents ERP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Amounts in thousands) (Unaudited) Nine Months Ended September 30, 2022 2021 SUPPLEMENTAL INFORMATION: Cash paid for interest, net of amounts capitalized $ 221,218 $ 199,799 Net cash paid (received) for income and other taxes $ 728 $ 1,040 Amortization of deferred financing costs: Investment in real estate, net $ ( 380 ) $ ( 227 ) Other assets $ 1,754 $ 1,754 Mortgage notes payable, net $ 1,620 $ 1,702 Notes, net $ 3,427 $ 2,943 Amortization of discounts and premiums on debt: Mortgage notes payable, net $ 1,865 $ 2,069 Notes, net $ 2,258 $ 1,865 Amortization of deferred settlements on derivative instruments: Other liabilities $ ( 9 ) $ ( 9 ) Accumulated other comprehensive income $ 9,987 $ 7,000 Write-off of pursuit costs: Investment in real estate, net $ 948 $ 3,000 Investments in unconsolidated entities $ 2,197 $ — Other assets $ 151 $ 533 Accounts payable and accrued expenses $ — $ 24 (Income) loss from investments in unconsolidated entities: Investments in unconsolidated entities $ 2,517 $ 2,062 Other liabilities $ 939 $ 966 Realized/unrealized (gain) loss on derivative instruments: Other assets $ ( 23,413 ) $ — Accumulated other comprehensive income $ 23,413 $ — Interest capitalized for real estate and unconsolidated entities under development: Investment in real estate, net $ ( 1,312 ) $ ( 12,260 ) Investments in unconsolidated entities $ ( 2,869 ) $ ( 105 ) Investments in unconsolidated entities – development/other: Investment in real estate, net $ — $ 967 Investments in unconsolidated entities $ ( 85,839 ) $ ( 8,251 ) Other liabilities $ ( 1,290 ) $ ( 2,010 ) Debt financing costs: Other assets $ ( 45 ) $ 228 Mortgage notes payable, net $ ( 228 ) $ ( 2,344 ) Notes, net $ ( 100 ) $ ( 4,331 ) Right-of-use assets and lease liabilities initial measurement and reclassifications: Right-of-use assets $ ( 224 ) $ 11,308 Lease liabilities $ 224 $ ( 11,308 ) Non-cash share distribution and other transfers from unconsolidated entities: Investments in unconsolidated entities $ 4,201 $ 1,430 Other assets $ ( 4,201 ) $ ( 1,430 ) See accompanying notes 15 Table of Contents ERP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENT S OF CHANGES IN CAPITAL (Amounts in thousands except per Unit data) (Unaudited) Nine Months Ended September 30, Quarter Ended September 30, 2022 2021 2022 2021 PARTNERS’ CAPITAL PREFERENCE UNITS Balance, beginning of period $ 37,280 $ 37,280 $ 37,280 $ 37,280 Balance, end of period $ 37,280 $ 37,280 $ 37,280 $ 37,280 GENERAL PARTNER Balance, beginning of period $ 10,951,940 $ 10,532,037 $ 10,883,459 $ 10,435,740 OP Unit Issuance: Conversion of OP Units held by Limited Partners into OP Units held by General Partner 1,680 68,257 196 1,597 Exercise of EQR share options 21,021 68,807 2,093 29,184 EQR’s Employee Share Purchase Plan (ESPP) 3,280 3,455 902 788 Share-based employee compensation expense: EQR restricted shares 9,526 6,572 2,165 1,758 EQR share options 1,856 2,541 466 565 EQR ESPP discount 637 798 217 165 Net income available to Units – General Partner 615,573 803,558 322,252 431,178 OP Units – General Partner distributions ( 705,529 ) ( 676,158 ) ( 235,105 ) ( 225,938 ) Offering costs ( 739 ) ( 267 ) ( 252 ) ( 267 ) Supplemental Executive Retirement Plan (SERP) ( 269 ) ( 1,335 ) — 722 Acquisition of Noncontrolling Interests – Partially Owned Properties ( 27,383 ) — ( 28 ) — Change in market value of Redeemable Limited Partners 127,570 ( 119,237 ) 29,430 ( 17,271 ) Adjustment for Limited Partners ownership in Operating Partnership 9,156 ( 27,085 ) 2,524 3,722 Balance, end of period $ 11,008,319 $ 10,661,943 $ 11,008,319 $ 10,661,943 LIMITED PARTNERS Balance, beginning of period $ 214,094 $ 233,162 $ 216,326 $ 205,691 Issuance of restricted units to Limited Partners 1 — — — Conversion of OP Units held by Limited Partners into OP Units held by General Partner ( 1,680 ) ( 68,257 ) ( 196 ) ( 1,597 ) Equity compensation associated with Units – Limited Partners 16,502 14,173 3,343 3,642 Net income available to Units – Limited Partners 21,024 27,903 10,997 14,847 Units – Limited Partners distributions ( 23,078 ) ( 23,366 ) ( 7,590 ) ( 7,367 ) Change in carrying value of Redeemable Limited Partners 870 ( 1,745 ) ( 1,779 ) ( 2,539 ) Adjustment for Limited Partners ownership in Operating Partnership ( 9,156 ) 27,085 ( 2,524 ) ( 3,722 ) Balance, end of period $ 218,577 $ 208,955 $ 218,577 $ 208,955 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Balance, beginning of period $ ( 34,272 ) $ ( 43,666 ) $ ( 30,650 ) $ ( 39,029 ) Accumulated other comprehensive income (loss) – derivative instruments: Unrealized holding gains (losses) arising during the period 23,413 — 24,672 — Losses reclassified into earnings from other comprehensive income 9,987 7,000 5,106 2,363 Balance, end of period $ ( 872 ) $ ( 36,666 ) $ ( 872 ) $ ( 36,666 ) DISTRIBUTIONS Distributions declared per Unit outstanding $ 1.875 $ 1.8075 $ 0.625 $ 0.6025 See accompanying notes 16 Table of Contents ERP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (Continued) (Amounts in thousands except per Unit data) (Unaudited) Nine Months Ended September 30, Quarter Ended September 30, 2022 2021 2022 2021 NONCONTROLLING INTERESTS NONCONTROLLING INTERESTS – PARTIALLY OWNED PROPERTIES Balance, beginning of period $ 18,166 $ 4,673 $ ( 1,734 ) $ 2,365 Net income attributable to Noncontrolling Interests 2,726 1,957 1,143 534 Contributions by Noncontrolling Interests 603 — — — Distributions to Noncontrolling Interests ( 18,267 ) ( 4,492 ) ( 1,004 ) ( 761 ) Acquisition of Noncontrolling Interests – Partially Owned Properties ( 4,795 ) — 28 — Balance, end of period $ ( 1,567 ) $ 2,138 $ ( 1,567 ) $ 2,138 See accompanying notes 17 Table of Contents EQUITY RESIDENTIAL ERP OPERATING LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Business Equity Residential (“EQR”) is an S&P 500 company focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters, a business that is conducted on its behalf by ERP Operating Limited Partnership (“ERPOP”). EQR is a Maryland real estate investment trust (“REIT”) formed in March 1993 and ERPOP is an Illinois limited partnership formed in May 1993. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. Unless otherwise indicated, the notes to consolidated financial statements apply to both the Company and the Operating Partnership. EQR is the general partner of, and as of September 30, 2022 owned an approximate 96.7 % ownership interest in, ERPOP. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR issues equity from time to time, the net proceeds of which it is obligated to contribute to ERPOP, but does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. As of September 30, 2022, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of 308 properties located in 10 states and the District of Columbia consisting of 79,594 apartment units. The ownership breakdown includes (table does not include any uncompleted development properties): Properties Apartment Units Wholly Owned Properties 293 76,480 Partially Owned Properties – Consolidated 15 3,114 308 79,594 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and certain reclassifications considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. In preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The balance sheets at December 31, 2021 have been derived from the audited financial statements at that date but do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. For further information, including definitions of capitalized terms not defined herein, refer to the consolidated financial statements and footnotes thereto included in the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021 . 18 Table of Contents Income and Other Taxes EQR has elected to be taxed as a REIT. This, along with the nature of the operations of its operating properties, resulted in no provision for federal income taxes at the EQR level. In addition, ERPOP generally is not liable for federal income taxes as the partners recognize their allocable share of income or loss in their tax returns; therefore no provision for federal income taxes has been made at the ERPOP level. Historically, the Company has generally only incurred certain state and local income, excise and franchise taxes. The Company has elected taxable REIT subsidiary (“TRS”) status for certain of its corporate subsidiaries and, as a result, these entities will incur both federal and state income taxes on any taxable income of such entities after consideration of any net operating losses. Recent Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued an amendment to the debt and equity financial instruments standards which simplifies the accounting for convertible instruments and accounting for contracts in an entity’s own equity. The Company adopted the standard when effective on January 1, 2022 and it had no impact on its consolidated results of operations and financial position. In March 2020, the FASB issued an amendment to the reference rate reform standard which provides the option for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on contract modifications and hedge accounting. The new standard was effective for the Company upon issuance and elections can be made through December 31, 2022, subject to a proposed extension to December 31, 2024. The Company elected to apply the hedge accounting expedients and application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. 3. Equity, Capital and Other Interests The Company refers to “Common Shares” and “Units” (which refer to both OP Units and restricted units) as equity securities for EQR and “General Partner Units” and “Limited Partner Units” as equity securities for ERPOP. To provide a streamlined and more readable presentation of the disclosures for the Company and the Operating Partnership, several sections below refer to the respective terminology for each with the same financial information and separate sections are provided, where needed, to further distinguish any differences in financial information and terminology. The following table presents the changes in the Company’s issued and outstanding Common Shares and Units for the nine months ended September 30, 2022 and 2021: 2022 2021 Common Shares Common Shares outstanding at January 1, 375,527,195 372,302,000 Common Shares Issued: Conversion of OP Units 37,661 1,153,963 Exercise of share options 381,384 1,401,755 Employee Share Purchase Plan (ESPP) 49,662 59,297 Restricted share grants, net 173,351 85,573 Common Shares outstanding at September 30, 376,169,253 375,002,588 Units Units outstanding at January 1, 12,659,027 13,858,073 Restricted unit grants, net 223,242 155,638 Conversion of OP Units to Common Shares ( 37,661 ) ( 1,153,963 ) Units outstanding at September 30, 12,844,608 12,859,748 Total Common Shares and Units outstanding at September 30, 389,013,861 387,862,336 Units Ownership Interest in Operating Partnership 3.3 % 3.3 % 19 Table of Contents The following table presents the changes in the Operating Partnership’s issued and outstanding General Partner Units and Limited Partner Units for the nine months ended September 30, 2022 and 2021: 2022 2021 General and Limited Partner Units General and Limited Partner Units outstanding at January 1, 388,186,222 386,160,073 Issued to General Partner: Exercise of EQR share options 381,384 1,401,755 EQR’s Employee Share Purchase Plan (ESPP) 49,662 59,297 EQR’s restricted share grants, net 173,351 85,573 Issued to Limited Partners: Restricted unit grants, net 223,242 155,638 General and Limited Partner Units outstanding at September 30, 389,013,861 387,862,336 Limited Partner Units Limited Partner Units outstanding at January 1, 12,659,027 13,858,073 Limited Partner restricted unit grants, net 223,242 155,638 Conversion of Limited Partner OP Units to EQR Common Shares ( 37,661 ) ( 1,153,963 ) Limited Partner Units outstanding at September 30, 12,844,608 12,859,748 Limited Partner Units Ownership Interest in Operating Partnership 3.3 % 3.3 % The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units, as well as the equity positions of the holders of restricted units, are collectively referred to as the “Noncontrolling Interests – Operating Partnership” and “Limited Partners Capital,” respectively, for the Company and the Operating Partnership. Subject to certain exceptions (including the “book-up” requirements of restricted units), the Noncontrolling Interests – Operating Partnership/Limited Partners Capital may exchange their Units with EQR for Common Shares on a one-for-one basis. The carrying value of the Noncontrolling Interests – Operating Partnership/Limited Partners Capital (including redeemable interests) is allocated based on the number of Noncontrolling Interests – Operating Partnership/Limited Partners Capital in total in proportion to the number of Noncontrolling Interests – Operating Partnership/Limited Partners Capital in total plus the total number of Common Shares/General Partner Units. Net income is allocated to the Noncontrolling Interests – Operating Partnership/Limited Partners Capital based on the weighted average ownership percentage during the period. The Operating Partnership has the right but not the obligation to make a cash payment instead of issuing Common Shares to any and all holders of Noncontrolling Interests – Operating Partnership/Limited Partners Capital requesting an exchange of their Noncontrolling Interests – Operating Partnership/Limited Partners Capital with EQR. Once the Operating Partnership elects not to redeem the Noncontrolling Interests – Operating Partnership/Limited Partners Capital for cash, EQR is obligated to deliver Common Shares to the exchanging holder of the Noncontrolling Interests – Operating Partnership/Limited Partners Capital. The Noncontrolling Interests – Operating Partnership/Limited Partners Capital are classified as either mezzanine equity or permanent equity. If EQR is required, either by contract or securities law, to deliver registered Common Shares, such Noncontrolling Interests – Operating Partnership/Limited Partners Capital are differentiated and referred to as “Redeemable Noncontrolling Interests – Operating Partnership” and “Redeemable Limited Partners,” respectively. Instruments that require settlement in registered shares cannot be classified in permanent equity as it is not always completely within an issuer’s control to deliver registered shares. Therefore, settlement in cash is assumed and that responsibility for settlement in cash is deemed to fall to the Operating Partnership as the primary source of cash for EQR, resulting in presentation in the mezzanine section of the balance sheet. The Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners are adjusted to the greater of carrying value or fair market value based on the Common Share price of EQR at the end of each respective reporting period. EQR has the ability to deliver unregistered Common Shares for the remaining portion of the Noncontrolling Interests – Operating Partnership/Limited Partners Capital that are classified in permanent equity at September 30, 2022 and December 31, 2021. The carrying value of the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners is allocated based on the number of Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners in proportion to the number of Noncontrolling Interests – Operating Partnership/Limited Partners Capital in total. Such percentage of the total carrying value of Units/Limited Partner Units which is ascribed to the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners is then adjusted to the greater of carrying value or fair market value as described above. As of September 30, 2022 and 2021, the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners have a redemption value of approximately $ 370.5 million and $ 459.9 million, respectively, which represents the value of Common Shares that would be issued in exchange for the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners. 20 Table of Contents The following table presents the changes in the redemption value of the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners for the nine months ended September 30, 2022 and 2021, respectively (amounts in thousands): 2022 2021 Balance at January 1, $ 498,977 $ 338,951 Change in market value ( 127,570 ) 119,237 Change in carrying value ( 870 ) 1,745 Balance at September 30, $ 370,537 $ 459,933 Net proceeds from EQR Common Share and Preferred Share (see definition below) offerings and proceeds from exercise of options for Common Shares are contributed by EQR to ERPOP. In return for those contributions, EQR receives a number of OP Units in ERPOP equal to the number of Common Shares it has issued in the equity offering (or in the case of a preferred equity offering, a number of preference units in ERPOP equal in number and having the same terms as the Preferred Shares issued in the equity offering). As a result, the net proceeds from Common Shares and Preferred Shares are allocated for the Company between shareholders’ equity and Noncontrolling Interests – Operating Partnership and for the Operating Partnership between General Partner’s Capital and Limited Partners Capital to account for the change in their respective percentage ownership of the underlying equity. The Company’s declaration of trust authorizes it to issue up to 100,000,000 preferred shares of beneficial interest, $ 0.01 par value per share (the “Preferred Shares”), with specific rights, preferences and other attributes as the Board of Trustees may determine, which may include preferences, powers and rights that are senior to the rights of holders of the Company’s Common Shares. The following table presents the Company’s issued and outstanding Preferred Shares/Preference Units as of September 30, 2022 and December 31, 2021: Amounts in thousands Annual Call Dividend Per September 30, December 31, Date (1) Share/Unit (2) 2022 2021 Preferred Shares/Preference Units of beneficial interest, $ 0.01 par value; 100,000,000 shares authorized: 8.29 % Series K Cumulative Redeemable Preferred Shares/Preference Units; liquidation value $ 50 per share/unit; 745,600 shares/units issued and outstanding as of September 30, 2022 and December 31, 2021 12/10/26 $ 4.145 $ 37,280 $ 37,280 $ 37,280 $ 37,280 (1) On or after the call date, redeemable Preferred Shares/Preference Units may be redeemed for cash at the option of the Company or the Operating Partnership, respectively, in whole or in part, at a redemption price equal to the liquidation price per share/unit, plus accrued and unpaid distributions, if any. (2) Dividends on Preferred Shares/Preference Units are payable quarterly. Other EQR and ERPOP currently have an active universal shelf registration statement for the issuance of equity and debt securities that automatically became effective upon filing with the SEC in May 2022 and expires in May 2025. Per the terms of ERPOP’s partnership agreement, EQR contributes the net proceeds of all equity offerings to the capital of ERPOP in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis) or preference units (on a one-for-one preferred share per preference unit basis). The Company has an At-The-Market (“ATM”) share offering program which allows EQR to issue Common Shares from time to time into the existing trading market at current market prices or through negotiated transactions, including under forward sale arrangements. In May 2022, the Company replaced the prior program with a new program with the authority to issue up to 13.0 million shares as of September 30, 2022 and which extended the program maturity to May 2025. Forward sale agreements under the ATM program allow the Company, at its election, to settle the agreements by issuing Common Shares in exchange for net proceeds at the then-applicable forward sale price specified by the agreement or, alternatively, to settle the agreements in whole or in part through the delivery or receipt of Common Shares or cash. Issuances of shares under these forward sale agreements are classified as equity transactions. Accordingly, no amounts relating to the forward sale agreements are recorded in the consolidated financial statements until settlement occurs. Prior to any settlements, the only impact to the consolidated financial statements is the inclusion of incremental shares, if any, within the calculation of diluted net income per share using the treasury stock method (see Note 11 for additional discussion). The actual forward price per share to be received by the Company upon settlement will be determined on the applicable settlement date based on adjustments made to the initial forward price to reflect the then-current overnight federal funds rate and the amount of dividends paid to holders of the Company’s Common Shares over the term of the forward sale agreement. 21 Table of Contents As of September 30, 2022, the Company had entered into forward sale agreements under the prior program for a total of approxim ately 1.7 million Common Shares at a weighted average initial forward price per share of $ 83.25 . All of these forward sale agreements were entered into during the quarter ended September 30, 2021. As of September 30, 2022, these forward sale agreements have not been settled and must be settled by March 2023. See Note 14 for additional discussion. The Company may repurchase up to 13.0 million Common Shares under its share repurchase program. No open market repurchases have occurred since 2008, and no repurchases of any kind have occurred since February 2014. As of September 30, 2022 , EQR has remaining authorization to repurchase up to 13.0 million of its shares. 4. Real Estate The following table summarizes the carrying amounts for the Company’s investment in real estate (at cost) as of September 30, 2022 and December 31, 2021 (amounts in thousands): September 30, 2022 December 31, 2021 Land $ 5,580,878 $ 5,814,790 Depreciable property: Buildings and improvements 19,445,470 19,632,284 Furniture, fixtures and equipment 2,295,387 2,220,203 In-Place lease intangibles 510,816 518,324 Projects under development: Land 3,201 — Construction-in-progress 86,146 24,307 Land held for development: Land 46,160 46,160 Construction-in-progress 14,005 16,838 Investment in real estate 27,982,063 28,272,906 Accumulated depreciation ( 8,813,578 ) ( 8,354,282 ) Investment in real estate, net $ 19,168,485 $ 19,918,624 During the nine months ended September 30, 2022, the Company acquired the following from unaffiliated parties (purchase price in thousands): Properties Apartment Units Purchase Price Rental Properties – Consolidated (1) 1 172 $ 113,000 Total 1 172 $ 113,000 (1) Purchase price includes an allocation of approximately $ 25.3 million to land and $ 87.7 million to depreciable property (inclusive of capitalized closing costs). During the nine months ended September 30, 2022, the Company disposed of the following to unaffiliated parties (sales price in thousands): Properties Apartment Units Sales Price Rental Properties – Consolidated 3 945 $ 746,150 Total 3 945 $ 746,150 The Company recognized a net gain on sales of real estate properties of approximately $ 304.3 million on the above sales. 5. Commitments to Acquire/Dispose of Real Estate The Company has not entered into any agreements to acquire rental properties or land parcels as of the date of filing. The Company has entered into an agreement to dispose of the following (sales price and net book value in thousands): Properties Apartment Units Sales Price Net Book Value at September 30, 2022 Land Parcels (one) — — $ 5,500 $ 3,930 Total — — $ 5,500 $ 3,930 22 Table of Contents The closing of pending transactions is subject to certain conditions and restrictions; therefore, there can be no assurance that the transactions will be consummated or that the final terms will not differ in material respects from any agreements summarized above. See Note 14 for discussion of the properties acquired or disposed of, if any, subsequent to September 30, 2022 . 6. Investments in Partially Owned Entities The Company has invested in various entities with unrelated third parties which are either consolidated or accounted for under the equity method of accounting (unconsolidated). Consolidated Variable Interest Entities (“VIEs”) In accordance with accounting standards for consolidation of VIEs, the Company consolidates ERPOP on EQR’s financial statements. As the sole general partner of ERPOP, EQR has exclusive control of ERPOP’s day-to-day management. The limited partners are not able to exercise substantive kick-out or participating rights. As a result, ERPOP qualifies as a VIE. EQR has a controlling financial interest in ERPOP and, thus, is ERPOP’s primary beneficiary. EQR has the power to direct the activities of ERPOP that most significantly impact ERPOP’s economic performance as well as the obligation to absorb losses or the right to receive benefits from ERPOP that could potentially be significant to ERPOP. The Company has various equity interests in certain joint ventures that have been deemed to be VIEs, and the Company is the VIEs’ primary beneficiary. As a result, the joint ventures are required to be consolidated on the Company’s financial statements. The following table summarizes the Company’s consolidated joint ventures as of September 30, 2022: Operating Properties (1) Project Under Development (2) Properties Apartment Units Project Apartment Units Consolidated Joint Ventures (VIE) 15 3,114 1 312 (1) During the nine months ended September 30, 2022 , the Company acquired its joint venture partner’s 25 % interest in a 432 -unit apartment property for $ 32.2 million, and the property is now wholly owned. In connection with the buyout, the carrying amount of the Noncontrolling Interests – Partially Owned Properties totaling $ 4.8 million was reduced to zero and the remaining $ 27.4 million was recorded to paid in capital/general partner capital. (2) The land under this project is subject to a long-term ground lease. The following table provides consolidated assets and liabilities related to the VIEs discussed above as of September 30, 2022 and December 31, 2021 (amounts in thousands): September 30, 2022 December 31, 2021 Consolidated Assets $ 675,974 $ 912,955 Consolidated Liabilities $ 148,071 $ 251,424 Certain consolidated joint ventures in which we have investments obtained mortgage debt to finance a portion of their activities. The following table and information summarizes the variable rate construction mortgage debt that is non-recourse to the Company at September 30, 2022 (aggregate and amounts borrowed under loan commitments in thousands): Recently Completed Operating Property (1) Project Under Development Number of joint ventures with debt financing 1 1 Aggregate loan commitments $ 67,589 $ 73,344 Amounts borrowed under loan commitments (2) $ 64,816 $ 34,356 Maturity dates 2023 2025 (1) The maturity date of the construction loan was extended to June 25, 2023. (2) See Note 9 for the current period proceeds of secured conventional floating rate debt under Mortgage Notes Payable . Investments in Unconsolidated Entities The Company has various equity interests in certain joint ventures that are unconsolidated and accounted for using the equity method of accounting. Most of these have been deemed to be VIEs and the Company is not the VIEs' primary beneficiary. The remaining have been deemed not to be VIEs and the Company does not have a controlling voting interest. 23 Table of Contents The following table and information summarizes the Company’s investments in unconsolidated entities as of September 30, 2022 and December 31, 2021 (amounts in thousands except for ownership percentage): September 30, 2022 December 31, 2021 Ownership Percentage Investments in Unconsolidated Entities: Various Real Estate Holdings (VIE) $ 36,372 $ 36,024 Varies Projects Under Development and Land Held for Development (VIE) 195,974 72,488 62 % - 95 % (1) Real Estate Technology Funds/Companies (VIE) 24,206 19,347 Varies Other ( 241 ) ( 411 ) Varies Investments in Unconsolidated Entities $ 256,311 $ 127,448 (1) In certain instances, the joint venture agreements contain provisions for promoted interests in favor of our joint venture partner. If the terms of the promoted interest are attained, then our share of the proceeds from a sale or other capital event of the unconsolidated entity may be less than the indicated ownership percentage. The following table summarizes the Company’s unconsolidated joint ventures that were deemed to be VIEs as of September 30, 2022: Real Estate Holdings (1) Projects Under Development (2), (5) Land Held for Development (2), (3) Entities Projects Apartment Units (4) Projects Apartment Units (4) Unconsolidated Joint Ventures (VIE) 2 6 1,982 2 745 (1) Represents entities that hold various real estate investments. (2) Represents separate unconsolidated joint ventures for the purpose of developing multifamily rental properties. (3) Represents separate unconsolidated joint ventures that have not yet started but are expected to start construction in the fourth quarter of 2022 and the second quarter of 2023. (4) Represents the intended number of apartment units to be developed. (5) The land parcel under one of the projects is subject to a long-term ground lease. New Development Joint Ventures The following table provides information on total unconsolidated development joint ventures entered into during the nine months ended September 30, 2022 (amounts in thousands except for number of unconsolidated joint ventures): Number of unconsolidated joint ventures (1) 2 Apartment units (2) 797 Investments in unconsolidated entities – acquisitions $ 49,330 (1) The entities qualify as VIEs, but the Company is not the primary beneficiary because it does not have the power to direct the activities that most significantly impact the VIE’s performance. Therefore, the entities are unconsolidated and recorded using the equity method of accounting. See Note 2 of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional discussion. (2) Represents the intended number of apartment units to be developed. 24 Table of Contents 7. Restricted Deposits The following table presents the Company’s restricted deposits as of September 30, 2022 and December 31, 2021 (amounts in thousands): September 30, 2022 December 31, 2021 Mortgage escrow deposits: Replacement reserves $ 12,213 $ 11,156 Mortgage principal reserves/sinking funds 23,484 19,104 Mortgage escrow deposits 35,697 30,260 Restricted cash: Tax-deferred (1031) exchange proceeds — 166,362 Earnest money on pending acquisitions — 2,000 Restricted deposits on real estate investments 235 284 Resident security and utility deposits 38,458 35,663 Other 2,289 1,835 Restricted cash 40,982 206,144 Restricted deposits $ 76,679 $ 236,404 8. Leases Lessor Accounting The Company is the lessor for its residential and non-residential leases and these leases are accounted for as operating leases under the lease standard. The Company generates the majority of its lease revenue from residential apartment leases that are generally twelve months or less in length. The residential apartment leases may include lease income related to such items as utility recoveries, parking rent, storage rent and pet rent that the Company treats as a single lease component because the amenities cannot be leased on their own and the timing and pattern of revenue recognition are the same. The collection of lease payments at lease commencement is probable and therefore the Company subsequently recognizes lease income over the lease term on a straight-line basis. Residential leases are renewable upon consent of both parties on an annual or monthly basis. The Company also generates lease revenue from non-residential leases that are generally for terms ranging between five to ten years . The non-residential leases generally consist of ground floor retail spaces and master-leased parking garages that serve as additional amenities for our residents. The non-residential leases may include lease income related to such items as utility recoveries, parking rent and storage rent that the Company treats as a single lease component because the amenities cannot be leased on their own and the timing and pattern of revenue recognition are the same. The collection of lease payments at lease commencement is probable and therefore the Company subsequently recognizes lease income over the lease term on a straight-line basis. Non-residential leases are renewable with market-based renewal options. The following table presents the lease income types relating to lease payments for residential and non-residential leases along with the total other rental income for the nine months ended September 30, 2022 and 2021 (amounts in thousands): Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021 Income Type Residential Leases Non-Residential Leases Total Residential Leases Non-Residential Leases Total Residential and non-residential rent $ 1,812,928 $ 48,279 $ 1,861,207 $ 1,629,778 $ 45,680 $ 1,675,458 Utility recoveries (RUBS income) (1) 59,826 596 60,422 55,331 519 55,850 Parking rent 32,546 322 32,868 30,403 465 30,868 Other lease revenue (2) ( 4,016 ) ( 568 ) ( 4,584 ) ( 19,442 ) 2,914 ( 16,528 ) Total lease revenue $ 1,901,284 $ 48,629 1,949,913 $ 1,696,070 $ 49,578 1,745,648 Parking revenue 27,701 18,455 Other revenue 57,863 54,764 Total other rental income (3) 85,564 73,219 Rental income $ 2,035,477 $ 1,818,867 (1) RUBS income primarily consists of variable payments representing the recovery of utility costs from residents. (2) Other lease revenue consists of the revenue adjustment related to bad debt and other miscellaneous lease revenue. (3) Other rental income is accounted for under the revenue recognition standard. 25 Table of Contents The following table presents the lease income types relating to lease payments for residential and non-residential leases along with the total other rental income for the quarters ended September 30, 2022 and 2021 (amounts in thousands): Quarter Ended September 30, 2022 Quarter Ended September 30, 2021 Income Type Residential Leases Non-Residential Leases Total Residential Leases Non-Residential Leases Total Residential and non-residential rent $ 620,880 $ 16,184 $ 637,064 $ 551,474 $ 14,443 $ 565,917 Utility recoveries (RUBS income) (1) 20,243 227 20,470 18,798 189 18,987 Parking rent 10,840 120 10,960 10,513 103 10,616 Other lease revenue (2) ( 3,127 ) ( 371 ) ( 3,498 ) ( 472 ) 1,776 1,304 Total lease revenue $ 648,836 $ 16,160 664,996 $ 580,313 $ 16,511 596,824 Parking revenue 9,270 6,883 Other revenue 20,833 19,499 Total other rental income (3) 30,103 26,382 Rental income $ 695,099 $ 623,206 (1) RUBS income primarily consists of variable payments representing the recovery of utility costs from residents. (2) Other lease revenue consists of the revenue adjustment related to bad debt and other miscellaneous lease revenue. (3) Other rental income is accounted for under the revenue recognition standard. The following table presents residential and non-residential accounts receivable and straight-line receivable balances for the Company’s properties as of September 30, 2022 and December 31, 2021 (amounts in thousands): Residential Non-Residential Balance Sheet (Other assets): September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021 Resident/tenant accounts receivable balances $ 34,939 $ 37,959 $ 3,951 $ 3,218 Allowance for doubtful accounts ( 30,543 ) ( 33,121 ) ( 2,767 ) ( 2,365 ) Net receivable balances $ 4,396 (1) $ 4,838 $ 1,184 $ 853 Straight-line receivable balances $ 3,466 $ 7,460 $ 13,792 $ 13,021 (1) The Company held residential security deposits approximating 53.9 % of the net residential receivable balance at September 30, 2022 . The following table presents residential bad debt for the Company’s properties for the nine months and quarters ended September 30, 2022 and 2021 (amounts in thousands): Nine Months Ended September 30, Quarter Ended September 30, Income Statement (Rental income): 2022 2021 2022 2021 Bad debt, net (1) $ 14,854 $ 29,751 $ 6,707 $ 3,979 % of rental income 0.8 % 1.7 % 1.0 % 0.7 % (1) Bad debt, net benefited from additional resident payments due to governmental rental assistance programs of approximately $ 32.5 million and $ 18.5 million for the nine months ended September 30, 2022 and 2021 , respectively, and $ 8.0 million and $ 13.5 million for the quarters ended September 30, 2022 and 2021 , respectively. The resident payments from governmental rental assistance decreased in the third quarter of 2022 as compared to the prior year period as these programs wind down. 9. Debt EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. Weighted average interest rates noted below for the nine months ended September 30, 2022 include the effect of any derivative instruments and amortization of premiums/discounts/OCI (other comprehensive income) on debt and derivatives. 26 Table of Contents Mortgage Notes Payable The following table summarizes the Company’s mortgage notes payable activity for the nine months ended September 30, 2022 (amounts in thousands): Mortgage notes payable, net as of December 31, 2021 Proceeds Lump sum payoffs Scheduled principal repayments Amortization of premiums/ discounts Amortization of deferred financing costs, net (1) Mortgage notes payable, net as of September 30, 2022 Fixed Rate Debt: Secured – Conventional $ 1,896,472 $ — $ ( 260,874 ) $ ( 3,147 ) $ 935 $ 956 $ 1,634,342 Floating Rate Debt: Secured – Conventional 59,890 37,429 (2) — ( 39 ) — 331 97,611 Secured – Tax Exempt 234,839 — — — 930 105 235,874 Floating Rate Debt 294,729 37,429 — ( 39 ) 930 436 333,485 Total $ 2,191,201 $ 37,429 $ ( 260,874 ) $ ( 3,186 ) $ 1,865 $ 1,392 $ 1,967,827 (1) Represents amortization of deferred financing costs, net of debt financing costs. (2) See Note 6 for additional discussion of the variable rate construction mortgage debt. The following table summarizes certain interest rate and maturity date information as of and for the nine months ended September 30, 2022: September 30, 2022 Interest Rate Ranges 0.10 % - 4.21 % Weighted Average Interest Rate 3.39 % Maturity Date Ranges 2023 - 2061 As of September 30, 2022, the Company had $ 250.0 million of secured debt (primarily tax-exempt bonds) subject to third-party credit enhancement. Notes The following table summarizes the Company’s notes activity for the nine months ended September 30, 2022 (amounts in thousands): Notes, net as of December 31, 2021 Proceeds Lump sum payoffs Amortization of premiums/ discounts Amortization of deferred financing costs, net (1) Notes, net as of September 30, 2022 Fixed Rate Debt: Unsecured – Public $ 5,835,222 $ — $ ( 500,000 ) $ 2,258 $ 3,327 $ 5,340,807 (1) Represents amortization of deferred financing costs, net of debt financing costs. T he following table summarizes certain interest rate and maturity date information as of and for the nine months ended September 30, 2022: September 30, 2022 Interest Rate Ranges 1.85 % - 7.57 % Weighted Average Interest Rate 3.65 % Maturity Date Ranges 2025 - 2047 The Company’s unsecured public notes contain certain financial and operating covenants including, among other things, maintenance of certain financial ratios. The Company was in compliance with its unsecured public debt covenants for the nine months ended September 30, 2022. 27 Table of Contents Line of Credit and Commercial Paper The Company has a $ 2.5 billion unsecured revolving credit facility maturing November 1, 2024 . The Company has the ability to increase available borrowings by an additional $ 750.0 million by adding lenders to the facility, obtaining the agreement of existing lenders to increase their commitments or incurring one or more term loans. The interest rate on advances under the facility will generally be LIBOR plus a spread (currently 0.775 %), or based on bids received from the lending group, and the Company pays an annual facility fee (currently 0.125 %). Both the spread and the facility fee are dependent on the Company’s senior unsecured credit rating. The Company did no t borrow any amounts under its revolving credit facility during the nine months ended September 30, 2022. The Company has an unsecured commercial paper note program under which it may borrow up to a maximum of $ 1.0 billion subject to market conditions. The notes will be sold under customary terms in the United States commercial paper note market and will rank pari passu with all of the Company’s other unsecured senior indebtedness. The notes bear interest at various floating rates with a weighted average interest rate of 1.18 % for the nine months ended September 30, 2022 and a weighted average maturity of 28 days as of September 30, 2022. The weighted average amount outstanding for the nine months ended September 30, 2022 was approximately $ 177.9 million. The Company limits its utilization of the revolving credit facility in order to maintain liquidity to support its $ 1.0 billion commercial paper program along with certain other obligations. The following table presents the availability on the Company’s unsecured revolving credit facility as of September 30, 2022 (amounts in thousands): September 30, 2022 Unsecured revolving credit facility commitment $ 2,500,000 Commercial paper balance outstanding ( 190,000 ) Unsecured revolving credit facility balance outstanding — Other restricted amounts ( 3,463 ) Unsecured revolving credit facility availability $ 2,306,537 Other The following table summarizes the Company’s total debt extinguishment costs recorded as additional interest expense for the nine months and quarters ended September 30, 2022 and 2021 (amounts in thousands): Nine Months Ended September 30, Quarter Ended September 30, 2022 2021 2022 2021 Write-offs of unamortized deferred financing costs $ 369 $ 264 $ 277 $ — Write-offs of unamortized (premiums)/discounts/OCI 3,947 — 3,570 — Total $ 4,316 $ 264 $ 3,847 $ — 10. Fair Value Measurements The valuation of financial instruments requires the Company to make estimates and judgments that affect the fair value of the instruments. The Company, where possible, bases the fair values of its financial instruments on listed market prices and third-party quotes. Where these are not available, the Company bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial instruments. In the normal course of business, the Company is exposed to the effect of interest rate changes. The Company may seek to manage these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments. The Company may also use derivatives to manage commodity prices in the daily operations of the business. 28 Table of Contents A three-level valuation hierarchy exists for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: • Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The Company’s derivative positions are valued using models developed by the respective counterparty as well as models applied internally by the Company that use as their inputs readily observable market parameters (such as forward yield curves and credit default swap data). The following table summarizes the inputs to the valuations for each type of fair value measurement: Fair Value Measurement Type Valuation Inputs Employee holdings (other than Common Shares) within the supplemental executive retirement plan (the “SERP”) Quoted market prices for identical assets. These holdings are included in other assets and other liabilities on the consolidated balance sheets. Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners Quoted market price of Common Shares. Mortgage notes payable and private unsecured debt (including its commercial paper and line of credit, if applicable) Indicative rates provided by lenders of similar loans. Public unsecured notes Quoted market prices for each underlying issuance. The fair values of the Company’s financial instruments (other than mortgage notes payable, unsecured notes, commercial paper, line of credit and derivative instruments), including cash and cash equivalents and other financial instruments, approximate their carrying or contract value. The following table provides a summary of the carrying and fair values for the Company’s mortgage notes payable and unsecured debt (including its commercial paper and line of credit, if applicable) at September 30, 2022 and December 31, 2021, respectively (amounts in thousands): September 30, 2022 December 31, 2021 Carrying Value Estimated Fair Value (Level 2) Carrying Value Estimated Fair Value (Level 2) Mortgage notes payable, net $ 1,967,827 $ 1,811,596 $ 2,191,201 $ 2,193,689 Unsecured debt, net 5,530,364 4,893,686 6,150,252 6,798,309 Total debt, net $ 7,498,191 $ 6,705,282 $ 8,341,453 $ 8,991,998 The following table summarizes the Company’s consolidated derivative instruments at September 30, 2022 (dollar amounts are in thousands): Forward Starting Swaps (1) Current Notional Balance $ 350,000 Lowest Interest Rate 2.447 % Highest Interest Rate 2.972 % Maturity Date 2033 (1) Forward Starting Swaps – Designed to partially fix interest rates in advance of planned future debt issuances. These swaps have mandatory counterparty terminations in 2024 and are targeted for certain 2023 debt issuances. 29 Table of Contents The following tables provide a summary of the fair value measurements for each major category of assets and liabilities measured at fair value on a recurring basis and the location within the accompanying consolidated balance sheets at September 30, 2022 and December 31, 2021, respectively (amounts in thousands): Fair Value Measurements at Reporting Date Using Description Balance Sheet Location 9/30/2022 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps Other Assets $ 23,413 $ — $ 23,413 $ — Supplemental Executive Retirement Plan Other Assets 125,585 125,585 — — Total $ 148,998 $ 125,585 $ 23,413 $ — Liabilities Supplemental Executive Retirement Plan Other Liabilities $ 125,585 $ 125,585 $ — $ — Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners Mezzanine $ 370,537 $ — $ 370,537 $ — Fair Value Measurements at Reporting Date Using Description Balance Sheet Location 12/31/2021 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Supplemental Executive Retirement Plan Other Assets $ 164,650 $ 164,650 $ — $ — Liabilities Supplemental Executive Retirement Plan Other Liabilities $ 164,650 $ 164,650 $ — $ — Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners Mezzanine $ 498,977 $ — $ 498,977 $ — The following tables provide a summary of the effect of cash flow hedges on the Company’s accompanying consolidated statements of operations and comprehensive income for the nine months ended September 30, 2022 and 2021, respectively (amounts in thousands): September 30, 2022 Type of Cash Flow Hedge Amount of Gain/(Loss) Recognized in OCI on Derivative Location of Gain/(Loss) Reclassified from Accumulated OCI into Income Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps $ 23,413 Interest expense $ ( 9,987 ) Total $ 23,413 $ ( 9,987 ) September 30, 2021 Type of Cash Flow Hedge Amount of Gain/(Loss) Recognized in OCI on Derivative Location of Gain/(Loss) Reclassified from Accumulated OCI into Income Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps $ — Interest expense $ ( 7,000 ) Total $ — $ ( 7,000 ) 30 Table of Contents As of September 30, 2022 and December 31, 2021 , there were approximately $ 0.9 million and $ 34.3 million in deferred losses, net, included in accumulated other comprehensive income (loss), respectively, related to previously settled and unsettled derivative instruments, of which an estimated $ 3.8 million may be recognized as additional interest expense during the twelve months ending September 30, 2023. 11. Earnings Per Share and Earnings Per Unit Equity Residential The following tables set forth the computation of net income per share – basic and net income per share – diluted for the Company (amounts in thousands except per share amounts): Nine Months Ended September 30, Quarter Ended September 30, 2022 2021 2022 2021 Numerator for net income per share – basic: Net income $ 641,641 $ 835,736 $ 335,165 $ 447,332 Allocation to Noncontrolling Interests – Operating Partnership ( 21,024 ) ( 27,903 ) ( 10,997 ) ( 14,847 ) Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties ( 2,726 ) ( 1,957 ) ( 1,143 ) ( 534 ) Preferred distributions ( 2,318 ) ( 2,318 ) ( 773 ) ( 773 ) Numerator for net income per share – basic $ 615,573 $ 803,558 $ 322,252 $ 431,178 Numerator for net income per share – diluted: Net income $ 641,641 $ 835,736 $ 335,165 $ 447,332 Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties ( 2,726 ) ( 1,957 ) ( 1,143 ) ( 534 ) Preferred distributions ( 2,318 ) ( 2,318 ) ( 773 ) ( 773 ) Numerator for net income per share – diluted $ 636,597 $ 831,461 $ 333,249 $ 446,025 Denominator for net income per share – basic and diluted: Denominator for net income per share – basic 375,710 373,474 375,850 374,308 Effect of dilutive securities: OP Units 11,893 12,367 11,895 12,019 Long-term compensation shares/units 1,785 1,801 1,555 2,047 ATM forward sales 6 — — — Denominator for net income per share – diluted 389,394 387,642 389,300 388,374 Net income per share – basic $ 1.64 $ 2.15 $ 0.86 $ 1.15 Net income per share – diluted $ 1.63 $ 2.14 $ 0.86 $ 1.15 ERP Operating Limited Partnership The following tables set forth the computation of net income per Unit – basic and net income per Unit – diluted for the Operating Partnership (amounts in thousands except per Unit amounts): Nine Months Ended September 30, Quarter Ended September 30, 2022 2021 2022 2021 Numerator for net income per Unit – basic and diluted: Net income $ 641,641 $ 835,736 $ 335,165 $ 447,332 Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties ( 2,726 ) ( 1,957 ) ( 1,143 ) ( 534 ) Allocation to Preference Units ( 2,318 ) ( 2,318 ) ( 773 ) ( 773 ) Numerator for net income per Unit – basic and diluted $ 636,597 $ 831,461 $ 333,249 $ 446,025 Denominator for net income per Unit – basic and diluted: Denominator for net income per Unit – basic 387,603 385,841 387,745 386,327 Effect of dilutive securities: Dilution for Units issuable upon assumed exercise/vesting of the Company’s long-term compensation shares/units 1,785 1,801 1,555 2,047 ATM forward sales 6 — — — Denominator for net income per Unit – diluted 389,394 387,642 389,300 388,374 Net income per Unit – basic $ 1.64 $ 2.15 $ 0.86 $ 1.15 Net income per Unit – diluted $ 1.63 $ 2.14 $ 0.86 $ 1.15 31 Table of Contents 12. Commitments and Contingencies Commitments Real Estate Development Commitments As of September 30, 2022 , the Company has both consolidated and unconsolidated real estate projects under development. The following table summarizes the gross remaining total project costs for the Company’s projects under development at September 30, 2022 (total project costs remaining in thousands): Projects Apartment Units Total Project Costs Remaining (1) Projects Under Development Consolidated 2 537 $ 171,301 Unconsolidated 6 1,982 402,321 Total Projects Under Development 8 2,519 $ 573,622 (1) The Company’s share of the $ 573.6 million in total project costs remaining approximates $ 158.8 million, with the balance funded by the Company’s joint venture partners (approximately $ 6.4 million) and/or applicable construction loans (approximately $ 408.4 million). We have entered into, and may continue in the future to enter into, joint venture agreements with third-party partners for the development of multifamily rental properties. The joint venture agreements with each development partner include buy-sell provisions that provide the right, but not the obligation, for the Company to acquire each respective partner’s interests or sell its interests at any time following the occurrence of certain pre-defined events described in the joint venture agreements. See Note 6 for additional discussion. Other Commitments We have entered into, and may continue in the future to enter into, real estate technology and other real estate fund investments. At September 30, 2022 , the Company has invested in eight real estate technology funds and one other real estate investment fund with aggregate remaining commitments of approximately $ 22.1 million. Contingencies Litigation and Legal Matters The Company, as an owner of real estate, is subject to various federal, state and local laws. Compliance by the Company with existing laws has not had a material adverse effect on the Company. However, the Company cannot predict the impact of new or changed laws or regulations on its current properties or on properties that it may acquire in the future. The Company does not believe there is any litigation pending or threatened against it that, individually or in the aggregate, may reasonably be expected to have a material adverse effect on the Company. 13. Reportable Segments Operating segments are defined as components of an enterprise that engage in business activities from which they may earn revenues and incur expenses and about which discrete financial information is available that is evaluated regularly by the chief operating decision maker. The chief operating decision maker decides how resources are allocated and assesses performance on a recurring basis at least quarterly. The Company’s primary business is the acquisition, development and management of multifamily residential properties, which includes the generation of rental and other related income through the leasing of apartment units to residents. The chief operating decision maker evaluates the Company’s operating performance geographically by market and both on a same store and non-same store basis. While the Company does maintain a non-residential presence, it accounts for approximately 3.7 % of total revenues for the nine months ended September 30, 2022 and is designed as an amenity for our residential residents. The chief operating decision maker evaluates the performance of each property on a consolidated residential and non-residential basis. The Company’s geographic consolidated same store operating segments represent its reportable segments. The Company’s development activities are other business activities that do not constitute an operating segment and as such, have been aggregated in the “Other” category in the tables presented below. 32 Table of Contents All revenues are from external customers and there is no customer who contributed 10% or more of the Company’s total revenues during the nine months and quarters ended September 30, 2022 and 2021, respectively. The primary financial measure for the Company’s rental real estate segment is net operating income (“NOI”), which represents rental income less: 1) property and maintenance expense and 2) real estate taxes and insurance expense (all as reflected in the accompanying consolidated statements of operations and comprehensive income). The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company’s apartment properties. Revenues for all leases are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods. The following table presents a reconciliation of NOI from our rental real estate for the nine months and quarters ended September 30, 2022 and 2021, respectively (amounts in thousands): Nine Months Ended September 30, Quarter Ended September 30, 2022 2021 2022 2021 Rental income $ 2,035,477 $ 1,818,867 $ 695,099 $ 623,206 Property and maintenance expense ( 365,277 ) ( 341,261 ) ( 124,048 ) ( 116,461 ) Real estate taxes and insurance expense ( 302,899 ) ( 297,780 ) ( 100,361 ) ( 96,909 ) Total operating expenses ( 668,176 ) ( 639,041 ) ( 224,409 ) ( 213,370 ) Net operating income $ 1,367,301 $ 1,179,826 $ 470,690 $ 409,836 The following tables present NOI from our rental real estate for each segment for the nine months and quarters ended September 30, 2022 and 2021, respectively, as well as total assets and capital expenditures at September 30, 2022 (amounts in thousands): Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021 Rental Income Operating Expenses NOI Rental Income Operating Expenses NOI Same store (1) Los Angeles $ 351,896 $ 103,121 $ 248,775 $ 316,206 $ 99,837 $ 216,369 Orange County 91,271 19,681 71,590 80,773 18,865 61,908 San Diego 64,540 14,574 49,966 58,210 13,892 44,318 Subtotal - Southern California 507,707 137,376 370,331 455,189 132,594 322,595 San Francisco 312,401 93,572 218,829 285,212 89,559 195,653 Washington, D.C. 306,161 102,564 203,597 290,255 97,407 192,848 New York 318,756 139,121 179,635 270,776 136,859 133,917 Seattle 210,011 59,222 150,789 190,386 61,092 129,294 Boston 194,640 60,003 134,637 173,953 57,478 116,475 Denver 32,505 9,129 23,376 28,732 8,482 20,250 Total same store 1,882,181 600,987 1,281,194 1,694,503 583,471 1,111,032 Non-same store/other Non-same store (2) 131,693 54,236 77,457 31,305 15,256 16,049 Other (3) 21,603 12,953 8,650 93,059 40,314 52,745 Total non-same store/other 153,296 67,189 86,107 124,364 55,570 68,794 Totals $ 2,035,477 $ 668,176 $ 1,367,301 $ 1,818,867 $ 639,041 $ 1,179,826 (1) For the nine months ended September 30, 2022 and 2021, same store primarily includes all properties acquired or completed that were stabilized prior to January 1, 2021, less properties subsequently sold, which represented 72,869 apartment units. (2) For the nine months ended September 30, 2022 and 2021, non-same store primarily includes properties acquired after January 1, 2021, plus any properties in lease-up and not stabilized as of January 1, 2021, and any properties undergoing major renovations. (3) Other includes development, other corporate operations and operations prior to disposition for properties sold. 33 Table of Contents Quarter Ended September 30, 2022 Quarter Ended September 30, 2021 Rental Income Operating Expenses NOI Rental Income Operating Expenses NOI Same store (1) Los Angeles $ 119,269 $ 34,783 $ 84,486 $ 110,180 $ 33,568 $ 76,612 Orange County 31,252 6,875 24,377 28,263 6,455 21,808 San Diego 22,129 5,018 17,111 20,283 4,717 15,566 Subtotal - Southern California 172,650 46,676 125,974 158,726 44,740 113,986 San Francisco 106,382 31,984 74,398 96,451 30,173 66,278 Washington, D.C. 106,098 35,686 70,412 98,643 34,238 64,405 New York 112,595 46,194 66,401 93,454 45,282 48,172 Seattle 72,756 20,385 52,371 63,936 20,658 43,278 Boston 66,981 20,122 46,859 58,863 19,401 39,462 Denver 11,102 3,191 7,911 9,812 2,950 6,862 All Other Markets 2,148 794 1,354 1,933 697 1,236 Total same store 650,712 205,032 445,680 581,818 198,139 383,679 Non-same store/other Non-same store (2) 42,707 17,068 25,639 15,702 7,736 7,966 Other (3) 1,680 2,309 ( 629 ) 25,686 7,495 18,191 Total non-same store/other 44,387 19,377 25,010 41,388 15,231 26,157 Totals $ 695,099 $ 224,409 $ 470,690 $ 623,206 $ 213,370 $ 409,836 (1) For the quarters ended September 30, 2022 and 2021, same store primarily includes all properties acquired or completed that were stabilized prior to July 1, 2021, less properties subsequently sold, which represented 73,402 apartment units. (2) For the quarters ended September 30, 2022 and 2021, non-same store primarily includes properties acquired after July 1, 2021, plus any properties in lease-up and not stabilized as of July 1, 2021, and any properties undergoing major renovations. (3) Other includes development, other corporate operations and operations prior to disposition for properties sold. Nine Months Ended September 30, 2022 Total Assets Capital Expenditures Same store (1) Los Angeles $ 2,604,866 $ 21,459 Orange County 358,574 4,170 San Diego 227,344 4,206 Subtotal - Southern California 3,190,784 29,835 San Francisco 3,090,195 21,988 Washington, D.C. 3,057,549 22,596 New York 3,424,747 17,365 Seattle 2,089,219 16,569 Boston 1,692,529 16,349 Denver 477,354 939 Total same store 17,022,377 125,641 Non-same store/other Non-same store (2) 2,517,480 15,524 Other (3) 725,548 542 Total non-same store/other 3,243,028 16,066 Totals $ 20,265,405 $ 141,707 (1) Same store primarily includes all properties acquired or completed that were stabilized prior to January 1, 2021, less properties subsequently sold, which represented 72,869 apartment units. (2) Non-same store primarily includes properties acquired after January 1, 2021, plus any properties in lease-up and not stabilized as of January 1, 2021, and any properties undergoing major renovations. (3) Other includes development, other corporate operations and capital expenditures for properties sold. 34 Table of Contents 14. Subsequent Events Subsequent to September 30, 2022, the Company: • Settled all of the forward sales agreements outstanding as of September 30, 2022 for a total of 1,740,550 Common Shares, at a weighted average forward price per share of $ 80.22 , which is inclusive of adjustments made to reflect the then-current federal funds rate and the amount of dividends paid to holders of the Company's Common Shares, for net proceeds of approximately $ 139.6 million. Concurrent with this transaction, ERPOP issued the same amount of OP Units to EQR in exchange for the net proceeds. See Note 3 for additional discussion of the Company’s ATM program; • Replaced its existing $ 2.5 billion facility with a new $ 2.5 billion unsecured revolving credit facility maturing October 26, 2027 ; and • Entered into $ 50.0 million of forward starting swaps to hedge changes in interest rates related to future taxable secured or unsecured debt issuances. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations For further information including definitions for capitalized terms not defined herein, refer to the consolidated financial statements and footnotes thereto included in the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021. In addition, please refer to the Definitions section below for various capitalized terms not immediately defined in this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations . Forward-Looking Statements Forward-looking statements are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates, projections and assumptions made by management. While the Company’s management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, which could cause actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Many of these uncertainties and risks are difficult to predict and beyond management’s control, such as the current novel coronavirus (“COVID-19”) pandemic. Additional factors that might cause such differences are discussed in Part I of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021, particularly those under Item 1A, Risk Factors. Forward-looking statements and related uncertainties are also included in the Notes to Consolidated Financial Statements in this report . Forward-looking statements are not guarantees of future performance, results or events. The forward-looking statements contained herein are made as of the date hereof and the Company undertakes no obligation to update or supplement these forward-looking statements. Overview Equity Residential (“EQR”) is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters. ERP Operating Limited Partnership (“ERPOP”) is focused on conducting the multifamily property business of EQR. EQR is a Maryland real estate investment trust (“REIT”) formed in March 1993 and ERPOP is an Illinois limited partnership formed in May 1993. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. EQR is the general partner of, and as of September 30, 2022 owned an approximate 96.7% ownership interest in, ERPOP. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR issues equity from time to time, the net proceeds of which it is obligated to contribute to ERPOP, but does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. The Company’s corporate headquarters is located in Chicago, Illinois and the Company also operates regional property management offices in most of its markets. 35 Table of Contents Available Information You may access our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, our proxy statements and any amendments to any of those reports/statements we file with or furnish to the Securities and Exchange Commission (“SEC”) free of charge on our website, www.equityapartments.com. These reports/statements are made available on our website as soon as reasonably practicable after we file them with or furnish them to the SEC. The information contained on our website, including any information referred to in this report as being available on our website, is not a part of or incorporated into this report. Business Objectives and Operating and Investing Strategies The Company’s and the Operating Partnership’s overall business objectives and operating and investing strategies have not changed from the information included in the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021. Results of Operations 2022 Transactions In conjunction with our business objectives and operating and investing strategies, the following table provides a rollforward of the transactions that occurred during the nine months ended September 30, 2022: Portfolio Rollforward ($ in thousands) Properties Apartment Units Purchase Price Acquisition Cap Rate 12/31/2021 310 80,407 Acquisitions: Consolidated Rental Properties 1 172 $ 113,000 3.5 % Unconsolidated Land Parcels (1) — — $ 56,886 Sales Price Disposition Yield Dispositions: Consolidated Rental Properties (3 ) (945 ) $ (746,150 ) (3.4 %) Configuration Changes — (40 ) 9/30/2022 308 79,594 (1) The purchase price listed represents the total consideration for the closing of the respective joint ventures. Acquisitions • The consolidated property acquired during the nine months ended September 30, 2022 was located in San Diego, CA; and • During the nine months ended September 30, 2022, the Company acquired its joint venture partner’s 25% interest in a 432-unit apartment property in Chevy Chase, MD for $32.2 million, and the property is now wholly owned. Dispositions • The consolidated properties disposed of during the nine months ended September 30, 2022 were located in New York City (2) and Washington, D.C. and the sales generated an Unlevered IRR of 5.3%. 36 Table of Contents Developments • The Company commenced construction on one consolidated and three unconsolidated apartment properties during the nine months ended September 30, 2022, located in Santa Clara, CA, Fort Worth, TX, Frisco, TX and Dallas, TX, consisting of 1,278 apartment units in the aggregate totaling approximately $417.7 million of expected development costs; • The Company stabilized one consolidated apartment property during the nine months ended September 30, 2022, located in Bethesda, MD, consisting of 154 apartment units totaling approximately $73.0 million of development costs; and • The Company spent approximately $155.6 million during the nine months ended September 30, 2022, primarily for consolidated and unconsolidated development projects. Investments in Unconsolidated Entities • The Company entered into two separate unconsolidated joint ventures during the nine months ended September 30, 2022 for the purpose of developing vacant land parcels in Frisco, TX and Wakefield, MA. The Company’s total investment in these two joint ventures is approximately $63.2 million as of September 30, 2022. One of the projects is related to the Company’s joint venture development program with Toll Brothers, Inc. (“Toll”), which commenced construction during the first quarter of 2022 prior to our entrance into the joint venture. See Notes 4, 6 and 14 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s real estate investments and investments in partially owned entities. Future Outlook • The Company assumes consolidated rental acquisitions of approximately $113.0 million and consolidated rental dispositions of approximately $746.0 million during the year ending December 31, 2022. Given current uncertainty in the transaction environment, the Company’s acquisition and disposition assumptions reflect no additional activities beyond one land parcel sale for $5.5 million currently under contract and scheduled to close in the fourth quarter of 2022; and • We currently anticipate spending approximately $200.0 million on development costs during the year ending December 31, 2022, primarily for consolidated and unconsolidated properties currently under construction (amount only includes our share of development costs). The above 2022 assumptions are based on current expectations and are forward-looking. Comparison of the nine months and quarter ended September 30, 2022 to the nine months and quarter ended September 30, 2021 The following table presents a reconciliation of diluted earnings per share/unit for the nine months and quarter ended September 30, 2022 as compared to the same period in 2021: Nine Months Ended September 30 Quarter Ended September 30 Diluted earnings per share/unit for period ended 2021 $ 2.14 $ 1.15 Property NOI 0.49 0.17 Interest expense (0.03 ) — Corporate overhead (1) (0.03 ) (0.01 ) Net gain/loss on property sales (0.73 ) (0.43 ) Non-operating asset gains/losses (0.06 ) — Depreciation expense (0.13 ) — Other (0.02 ) (0.02 ) Diluted earnings per share/unit for period ended 2022 $ 1.63 $ 0.86 (1) Corporate overhead includes property management and general and administrative expenses. The Company’s primary financial measure for evaluating each of its apartment communities is net operating income (“NOI”). NOI represents rental income less direct property operating expenses (including real estate taxes and insurance). The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company’s apartment properties. 37 Table of Contents The following tables present reconciliations of operating income per the consolidated statements of operations to NOI, along with rental income, operating expenses and NOI per the consolidated statements of operations allocated between same store and non-same store results (amounts in thousands): Nine Months Ended September 30, 2022 2021 $ Change % Change Operating income $ 873,683 $ 1,033,958 $ (160,275 ) (15.5 )% Adjustments: Property management 83,035 74,357 8,678 11.7 % General and administrative 47,033 43,102 3,931 9.1 % Depreciation 667,896 616,032 51,864 8.4 % Net (gain) loss on sales of real estate properties (304,346 ) (587,623 ) 283,277 (48.2 )% Total NOI $ 1,367,301 $ 1,179,826 $ 187,475 15.9 % Rental income: Same store $ 1,882,181 $ 1,694,503 $ 187,678 11.1 % Non-same store/other 153,296 124,364 28,932 23.3 % Total rental income 2,035,477 1,818,867 216,610 11.9 % Operating expenses: Same store 600,987 583,471 17,516 3.0 % Non-same store/other 67,189 55,570 11,619 20.9 % Total operating expenses 668,176 639,041 29,135 4.6 % NOI: Same store 1,281,194 1,111,032 170,162 15.3 % Non-same store/other 86,107 68,794 17,313 25.2 % Total NOI $ 1,367,301 $ 1,179,826 $ 187,475 15.9 % Note: See Note 13 in the Notes to Consolidated Financial Statements for detail by reportable segment/market. Non-same store/other NOI results consist primarily of properties acquired in calendar years 2021 and 2022, operations from the Company’s development properties and operations prior to disposition from 2021 and 2022 sold properties. • The increase in same store rental income is primarily driven by strong Physical Occupancy and continued growth in pricing. • The increase in same store operating expenses is due primarily to: • Utilities – An $11.0 million increase primarily from gas and electric due to higher commodity prices; • Repairs and maintenance – A $6.8 million increase primarily driven by volume and timing of maintenance and repairs along with increases in minimum wage on contracted services; and • On-site payroll – A $4.5 million decrease due to improved sales and service staff utilization from various technology initiatives and higher than usual staffing vacancies during the current period. • The increase in non-same store/other NOI is due primarily to a positive impact of higher NOI from properties acquired during 2021 and 2022 of $45.2 million and higher NOI from development properties in lease-up of $14.6 million, partially offset by a negative impact of lost NOI from 2021 and 2022 dispositions of $41.1 million and a negative impact of $1.2 million in lower NOI from one former master-leased property and two properties that have been removed from same store while undergoing major renovations. • The increase in consolidated total NOI is primarily a result of the Company’s higher NOI from same store properties, largely due to improvement in same store revenues as noted above. Operating expense growth remains modest due to a combination of continued success in managing controllable expenses and modest growth in real estate tax expense (increased by only $1.2 million), leading to 15.3% same store NOI growth for the nine months ended September 30, 2022 as compared to the prior year period. See the Same Store Results section below for additional discussion of those results. Property management expenses include off-site expenses associated with the self-management of the Company’s properties as well as management fees paid to any third-party management companies. These expenses increased approximately $8.7 million or 11.7% and approximately $2.0 million or 8.2% for the nine months and quarter ended September 30, 2022, respectively, as compared to the prior year periods. These increases are primarily attributable to increases in payroll-related costs, training/conference costs, temporary help/contractors costs, travel costs and employment expenses, partially offset by decreases in legal and professional fees. General and administrative expenses, which includes corporate operating expenses, increased approximately $3.9 million or 9.1% and approximately $0.3 million or 2.5% for the nine months and quarter ended September 30, 2022, respectively, as compared to the prior year periods, primarily due to increases in payroll-related costs, legal and professional fees and training/conference costs. 38 Table of Contents Depreciation expense, which includes depreciation on non-real estate assets, increased approximately $51.9 million or 8.4% for the nine months ended September 30, 2022, as compared to the prior year period, primarily as a result of additional depreciation expense on properties acquired in 2021 and 2022 and development properties placed in service during 2021, partially offset by lower depreciation from properties sold in 2021 and 2022. Depreciation expense decreased approximately $1.3 million or 0.6% for the quarter ended September 30, 2022 as compared to the prior year period, primarily as a result of lower depreciation from properties sold in the fourth quarter of 2021 and 2022 and in-place leases for 2021 acquisitions being fully depreciated as of December 31, 2021, partially offset by additional depreciation expense on properties acquired in 2022 and development properties placed in service during 2021. Net gain on sales of real estate properties decreased approximately $283.3 million or 48.2% and approximately $167.4 million or 46.0% for the nine months and quarter ended September 30, 2022, respectively, as compared to the prior year periods, primarily as a result of a lower sales volume with the sale of three consolidated apartment properties in 2022 as compared to the sale of ten consolidated apartment properties in the same period in 2021. Interest and other income decreased approximately $20.4 million or 80.8% and approximately $0.3 million or 26.0% for the nine months and quarter ended September 30, 2022, respectively, as compared to the prior year periods. These decreases are primarily due to a gain of $23.6 million on the sale of various investment securities that occurred during 2021 but not during 2022, partially offset by increases in litigation settlement proceeds that occurred during 2022 but not during 2021. Other expenses decreased approximately $1.7 million or 15.7% for the nine months ended September 30, 2022 as compared to the prior year period, primarily due to a decline in construction defect and litigation reserves recorded between 2022 and 2021, partially offset by increases in advocacy contributions and demolition/abatement costs. Other expenses increased approximately $0.3 million or 8.7% for the quarter ended September 30, 2022 as compared to the prior year period, primarily due to increases in advocacy contributions and demolition/abatement costs, partially offset by construction defect and litigation reserves that occurred during 2021 but not during 2022. Interest expense, including amortization of deferred financing costs, increased approximately $14.6 million or 7.0% and approximately $4.3 million or 6.2% for the nine months and quarter ended September 30, 2022, respectively, as compared to the prior year periods. These increases are primarily due to higher overall interest rates and lower capitalized interest. The effective interest cost on all indebtedness, excluding debt extinguishment costs/prepayment penalties, for the nine months ended September 30, 2022 was 3.67% as compared to 3.51% for the prior year period, and for the quarter ended September 30, 2022 was 3.67% as compared to 3.46% for the prior year period. The Company capitalized interest of approximately $4.2 million and $12.4 million during the nine months ended September 30, 2022 and 2021, respectively, and $1.9 million and $4.2 million during the quarters ended September 30, 2022 and 2021, respectively. Same Store Results Properties that the Company owned and were stabilized for all of both of the nine months ended September 30, 2022 and 2021 (the “Nine-Month 2022 Same Store Properties”), which represented 72,869 apartment units, drove the Company’s results of operations. Properties are considered “stabilized” when they have achieved 90% occupancy for three consecutive months. Properties are included in same store when they are stabilized for all of the current and comparable periods presented. The following table provides comparative total same store results and statistics for the Nine-Month 2022 Same Store Properties: September YTD 2022 vs. September YTD 2021 Same Store Results/Statistics Including 72,869 Same Store Apartment Units $ in thousands (except for Average Rental Rate) September YTD 2022 September YTD 2021 Residential % Change Non- Residential % Change Total % Change Residential Non- Residential Total Revenues $ 1,813,450 11.2 % $ 68,731 8.1 % $ 1,882,181 11.1 % Revenues $ 1,630,928 $ 63,575 $ 1,694,503 Expenses $ 583,185 3.0 % $ 17,802 3.1 % $ 600,987 3.0 % Expenses $ 566,210 $ 17,261 $ 583,471 NOI $ 1,230,265 15.5 % $ 50,929 10.0 % $ 1,281,194 15.3 % NOI $ 1,064,718 $ 46,314 $ 1,111,032 Average Rental Rate $ 2,866 10.5 % Average Rental Rate $ 2,594 Physical Occupancy 96.5 % 0.6 % Physical Occupancy 95.9 % Turnover 33.6 % (1.6 %) Turnover 35.2 % Note: Same store revenues for all leases are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods. 39 Table of Contents The following table provides results and statistics related to our Residential same store operations for the nine months ended September 30, 2022 and 2021: September YTD 2022 vs. September YTD 2021 Same Store Residential Results/Statistics by Market Increase (Decrease) from Prior Year Markets/Metro Areas Apartment Units Sept. YTD 22 % of Actual NOI Sept. YTD 22 Average Rental Rate Sept. YTD 22 Weighted Average Physical Occupancy % Sept. YTD 22 Turnover Average Rental Rate Physical Occupancy Turnover Los Angeles 14,662 20.0 % $ 2,725 96.9 % 28.3 % 11.4 % 0.2 % (3.8 %) Orange County 4,028 5.8 % 2,591 97.1 % 25.8 % 13.6 % (0.6 %) (1.4 %) San Diego 2,706 4.1 % 2,737 97.0 % 29.3 % 11.9 % (0.7 %) (5.2 %) Subtotal – Southern California 21,396 29.9 % 2,701 97.0 % 28.0 % 11.8 % 0.0 % (3.5 %) San Francisco 11,366 17.6 % 3,127 96.3 % 32.1 % 8.0 % 1.6 % (5.2 %) Washington, D.C. 14,186 16.2 % 2,432 96.9 % 33.8 % 4.7 % 0.6 % (2.5 %) New York 8,536 13.1 % 3,964 97.0 % 34.9 % 15.8 % 2.7 % 3.9 % Seattle 9,331 11.4 % 2,472 95.1 % 41.9 % 10.7 % (0.7 %) 2.5 % Boston 6,430 9.9 % 3,165 96.2 % 37.3 % 10.9 % 0.5 % (0.4 %) Denver 1,624 1.9 % 2,275 96.9 % 48.4 % 12.0 % 0.2 % 2.5 % Total 72,869 100.0 % $ 2,866 96.5 % 33.6 % 10.5 % 0.6 % (1.6 %) Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.3% of total revenues for the nine months ended September 30, 2022. Despite geopolitical and economic uncertainties, demand to live in our apartment communities remained healthy, which our financial results reflected, as we continued to capture the gap between in-place rent levels and market rent levels. Demand for our apartments continues to support strong Physical Occupancy with pricing that is largely in-line with expectations, including modest use of Leasing Concessions. Key operating drivers for this performance during 2022 include: • Pricing – Pricing (net of Leasing Concessions) in 2022 has been the strongest in the Company’s history, driven by continued improvement across the portfolio, especially in New York. After this unprecedented 2022 growth, pricing began to moderate in late August 2022, which is typical, with slightly greater than anticipated price sensitivity in Seattle and San Francisco as of late. The use of Leasing Concessions has also declined significantly from its peak in February 2021. • Physical Occupancy – Physical Occupancy of 96.5% for the nine months ended September 30, 2022 remained strong, exceeding 2021 levels and contributing to growth in Same Store Residential Revenues. • Percentage of Residents Renewing and Turnover – We continue to see a high Percentage of Residents Renewing in our portfolio, which we believe reflects both the strength of demand and quality of our product. The Percentage of Residents Renewing has been strong at 53.8% for the third quarter of 2022. Turnover remains low at 33.6% for the nine months ended September 30, 2022, reflecting a healthy and consistent trend of historically high resident retention. In addition to these stronger fundamentals, bad debt, net has moderated during the nine months ended September 30, 2022 with improvement in resident collections primarily driven by receipt of governmental rental assistance payments on behalf of our residents. Transaction activity has slowed as buyers and sellers adjust their expectations to a volatile economic climate and rising interest rates. While this type of environment can be challenging, the Company has traditionally found investment opportunities during periods of market dislocation as our ability to move quickly and our relatively low cost of capital creates flexibility that can provide us a competitive advantage. Long-term, we expect elevated single family home ownership costs, positive household formation trends and the overall deficit in housing across the country to buffer the impact on our business from potential economic weakness. We also see our affluent resident base as being more resilient to rising inflation due to higher levels of disposable income and lower relative rent-to-income ratios. 40 Table of Contents Liquidity and Capital Resources With approximately $2.3 billion in readily available liquidity, a strong balance sheet, limited near-term maturities, very strong credit metrics and ample access to capital markets, the Company believes it is well positioned to meet its future obligations and opportunities. See further discussion below and Note 14 in the Notes to Consolidated Financial Statements for discussion of events, if any, subsequent to September 30, 2022. Statements of Cash Flows The following table sets forth our sources and uses of cash flows for the nine months ended September 30, 2022 and 2021 (amounts in thousands): Nine Months Ended September 30, 2022 2021 Cash flow provided by (used for): Operating activities $ 1,120,228 $ 978,213 Investing activities $ 243,336 $ (309,589 ) Financing activities $ (1,602,333 ) $ (541,603 ) The following provides information regarding the Company’s cash flows from operating, investing and financing activities for the nine months ended September 30, 2022. Operating Activities Our operating cash flows are primarily impacted by NOI and its components, such as Average Rental Rates, Physical Occupancy levels and operating expenses related to our properties. Cash provided by operating activities for the nine months ended September 30, 2022 as compared to the prior year period, increased by approximately $142.0 million as a direct result of the NOI and other changes discussed above in Results of Operations . Investing Activities Our investing cash flows are primarily impacted by our transaction activity (acquisitions/dispositions), development spend, capital expenditures and unconsolidated joint venture activity. For the nine months ended September 30, 2022, key drivers were: • Acquired one consolidated rental property for approximately $113.0 million in cash; • Disposed of three consolidated rental properties, receiving net proceeds of approximately $720.3 million; • Invested $81.9 million primarily in development projects; • Invested $141.7 million in capital expenditures to real estate; and • Invested $136.5 million primarily in unconsolidated development joint venture entities as well as unconsolidated investments in real estate technology funds/companies for various technology initiatives. Financing Activities Our financing cash flows primarily relate to our borrowing activity (debt proceeds or repayment), distributions/dividends to shareholders and other Common Share activity. For the nine months ended September 30, 2022, key drivers were: • Obtained $37.4 million in variable rate construction mortgage debt that is non-recourse to the Company; • Repaid $264.1 million of mortgage loans (inclusive of scheduled principal repayments); • Repaid $500.0 million of unsecured notes by using disposition proceeds; • Acquired our joint venture partner’s 25% interest in an apartment property for $32.2 million; • Issued Common Shares related to share option exercises and ESPP purchases and received net proceeds of $24.3 million, which were contributed to the capital of the Operating Partnership in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis); and • Paid dividends/distributions on Common Shares, Preferred Shares, Units (including OP Units and restricted units) and noncontrolling interests in partially owned properties totaling approximately $740.0 million. 41 Table of Contents Short-Term Liquidity and Cash Proceeds The Company generally expects to meet its short-term liquidity requirements, including capital expenditures related to maintaining its existing properties and scheduled unsecured note and mortgage note repayments, through its working capital, net cash provided by operating activities and borrowings under the Company’s revolving credit facility and commercial paper program. Currently, the Company considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions. The following table presents the Company’s balances for cash and cash equivalents, restricted deposits and the available borrowing capacity on its revolving credit facility as of September 30, 2022 and December 31, 2021 (amounts in thousands): September 30, 2022 December 31, 2021 Cash and cash equivalents $ 44,788 $ 123,832 Restricted deposits $ 76,679 $ 236,404 Unsecured revolving credit facility availability $ 2,306,537 $ 2,181,372 Credit Facility and Commercial Paper Program The Company has a $2.5 billion unsecured revolving credit facility maturing November 1, 2024. The Company has the ability to increase available borrowings by an additional $750.0 million by adding lenders to the facility, obtaining the agreement of existing lenders to increase their commitments or incurring one or more term loans. The interest rate on advances under the facility will generally be the London Interbank Offered Rate (“LIBOR”) plus a spread (currently 0.775%), or based on bids received from the lending group, and the Company pays an annual facility fee (currently 0.125%). Both the spread and the facility fee are dependent on the Company’s senior unsecured credit rating. The unsecured revolving credit agreement contains provisions that establish a process for entering into an amendment to replace LIBOR under certain circumstances, such as the anticipated phase-out of LIBOR. The Company may borrow up to a maximum of $1.0 billion under its commercial paper program subject to market conditions. The notes will be sold under customary terms in the United States commercial paper note market and will rank pari passu with all of the Company’s other unsecured senior indebtedness. The Company limits its utilization of the revolving credit facility in order to maintain liquidity to support its $1.0 billion commercial paper program along with certain other obligations. The following table presents the availability on the Company’s unsecured revolving credit facility as of October 21, 2022 (amounts in thousands): October 21, 2022 Unsecured revolving credit facility commitment $ 2,500,000 Commercial paper balance outstanding (145,000 ) Unsecured revolving credit facility balance outstanding — Other restricted amounts (3,463 ) Unsecured revolving credit facility availability $ 2,351,537 Dividend Policy The Company declared a dividend/distribution for the first, second and third quarters of 2022 of $0.625 per share/unit in each quarter, an annualized increase of 3.7% over the amount paid in 2021. All future dividends/distributions remain subject to the discretion of the Company’s Board of Trustees. Total dividends/distributions paid in October 2022 amounted to $242.7 million (excluding distributions on Partially Owned Properties), which consisted of certain distributions declared during the quarter ended September 30, 2022. 42 Table of Contents Long-Term Financing and Capital Needs The Company expects to meet its long-term liquidity requirements, such as lump sum unsecured note and mortgage debt maturities, property acquisitions and financing of development activities, through the issuance of secured and unsecured debt and equity securities (including additional OP Units), proceeds received from the disposition of certain properties and joint ventures, along with cash generated from operations after all distributions. The Company has a significant number of unencumbered properties available to secure additional mortgage borrowings should unsecured capital be unavailable or the cost of alternative sources of capital be too high. The value of and cash flow from these unencumbered properties are in excess of the requirements the Company must maintain in order to comply with covenants under its unsecured notes and line of credit. Of the $28.0 billion in investment in real estate on the Company’s balance sheet at September 30, 2022, $24.3 billion or 87.0% was unencumbered. However, there can be no assurances that these sources of capital will be available to the Company in the future on acceptable terms or otherwise. EQR issues equity and guarantees certain debt of the Operating Partnership from time to time. EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. The Company settled all of its outstanding forward sales agreements under its At-The-Market (“ATM”) share offering program subsequent to September 30, 2022. See Note 14 in the Notes to Consolidated Financial Statements for additional discussion. The Company’s total debt summary schedule as of September 30, 2022 is as follows: Debt Summary as of September 30, 2022 ($ in thousands) Debt Balances % of Total Secured $ 1,967,827 26.2 % Unsecured 5,530,364 73.8 % Total $ 7,498,191 100.0 % Fixed Rate Debt: Secured – Conventional $ 1,634,342 21.8 % Unsecured – Public 5,340,807 71.2 % Fixed Rate Debt 6,975,149 93.0 % Floating Rate Debt: Secured – Conventional 97,611 1.3 % Secured – Tax Exempt 235,874 3.1 % Unsecured – Revolving Credit Facility — — Unsecured – Commercial Paper Program 189,557 2.6 % Floating Rate Debt 523,042 7.0 % Total $ 7,498,191 100.0 % The Company’s long-term financing and capital needs and sources have not changed materially from the information included in the Company's and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 2021. Definitions The definition of certain terms described above or below are as follows: • Acquisition Cap Rate – NOI that the Company anticipates receiving in the next 12 months (or the year two or three stabilized NOI for properties that are in lease-up at acquisition) less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $100-$450 per apartment unit depending on the age and condition of the asset) divided by the gross purchase price of the asset. The weighted average Acquisition Cap Rate for acquired properties is weighted based on the projected NOI streams and the relative purchase price for each respective property. • Average Rental Rate – Total Residential rental revenues reflected on a straight-line basis in accordance with GAAP divided by the weighted average occupied apartment units for the reporting period presented. 43 Table of Contents • Disposition Yield – NOI that the Company anticipates giving up in the next 12 months less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $100-$450 per apartment unit depending on the age and condition of the asset) divided by the gross sales price of the asset. The weighted average Disposition Yield for sold properties is weighted based on the projected NOI streams and the relative sales price for each respective property. • Leasing Concessions – Reflects upfront discounts on both new move-in and renewal leases on a straight-line basis. • Non-Residential – Consists of revenues and expenses from retail and public parking garage operations. • Non-Same Store Properties – For annual comparisons, primarily includes all properties acquired during 2021 and 2022, plus any properties in lease-up and not stabilized as of January 1, 2021. • Percentage of Residents Renewing – Leases renewed expressed as a percentage of total renewal offers extended during the reporting period. • Physical Occupancy – The weighted average occupied apartment units for the reporting period divided by the average of total apartment units available for rent for the reporting period. • Residential – Consists of multifamily apartment revenues and expenses. • Same Store Properties – For annual comparisons, primarily includes all properties acquired or completed that are stabilized prior to January 1, 2021, less properties subsequently sold. Properties are included in Same Store when they are stabilized for all of the current and comparable periods presented. • Same Store Residential Revenues – Revenues from our same store properties presented on a GAAP basis which reflects the impact of Leasing Concessions on a straight-line basis. • Turnover – Total Residential move-outs (including inter-property and intra-property transfers) divided by total Residential apartment units. • Unlevered Internal Rate of Return (“IRR”) – The Unlevered IRR on sold properties is the compound annual rate of return calculated by the Company based on the timing and amount of: (i) the gross purchase price of the property plus any direct acquisition costs incurred by the Company; (ii) total revenues earned during the Company’s ownership period; (iii) total direct property operating expenses (including real estate taxes and insurance) incurred during the Company’s ownership period; (iv) capital expenditures incurred during the Company’s ownership period; and (v) the gross sales price of the property net of selling costs. Critical Accounting Policies and Estimates The Company’s and the Operating Partnership’s critical accounting policies and estimates have not changed from the information included in the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021. 44 Table of Contents Funds From Operations and Normalized Funds From Operations The following is the Company’s and the Operating Partnership’s reconciliation of net income to FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units for the nine months and quarters ended September 30, 2022 and 2021: Funds From Operations and Normalized Funds From Operations (Amounts in thousands) Nine Months Ended September 30, Quarter Ended September 30, 2022 2021 2022 2021 Net income $ 641,641 $ 835,736 $ 335,165 $ 447,332 Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties (2,726 ) (1,957 ) (1,143 ) (534 ) Preferred/preference distributions (2,318 ) (2,318 ) (773 ) (773 ) Net income available to Common Shares and Units / Units 636,597 831,461 333,249 446,025 Adjustments: Depreciation 667,896 616,032 214,129 215,397 Depreciation – Non-real estate additions (3,189 ) (3,228 ) (1,075 ) (1,052 ) Depreciation – Partially Owned Properties (2,097 ) (2,676 ) (543 ) (994 ) Depreciation – Unconsolidated Properties 1,897 1,867 657 634 Net (gain) loss on sales of unconsolidated entities - operating assets (9 ) (4 ) — — Net (gain) loss on sales of real estate properties (304,346 ) (587,623 ) (196,551 ) (363,928 ) FFO available to Common Shares and Units / Units (1) (3) (4) 996,749 855,829 349,866 296,082 Adjustments: Impairment – non-operating assets — — — — Write-off of pursuit costs 3,296 3,557 781 910 Debt extinguishment and preferred share redemption (gains) losses 4,316 264 3,847 — Non-operating asset (gains) losses (1,174 ) (23,014 ) 156 294 Other miscellaneous items 1,832 4,520 2,017 1,179 Normalized FFO available to Common Shares and Units / Units (2) (3) (4) $ 1,005,019 $ 841,156 $ 356,667 $ 298,465 FFO (1) (3) $ 999,067 $ 858,147 $ 350,639 $ 296,855 Preferred/preference distributions (2,318 ) (2,318 ) (773 ) (773 ) FFO available to Common Shares and Units / Units (1) (3) (4) $ 996,749 $ 855,829 $ 349,866 $ 296,082 Normalized FFO (2) (3) $ 1,007,337 $ 843,474 $ 357,440 $ 299,238 Preferred/preference distributions (2,318 ) (2,318 ) (773 ) (773 ) Normalized FFO available to Common Shares and Units / Units (2) (3) (4) $ 1,005,019 $ 841,156 $ 356,667 $ 298,465 (1) The National Association of Real Estate Investment Trusts (“Nareit”) defines funds from operations (“FFO”) (December 2018 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding gains or losses from sales and impairment write-downs of depreciable real estate and land when connected to the main business of a REIT, impairment write-downs of investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and depreciation and amortization related to real estate. Adjustments for partially owned consolidated and unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. (2) Normalized funds from operations (“Normalized FFO”) begins with FFO and excludes: • the impact of any expenses relating to non-operating asset impairment; • pursuit cost write-offs; • gains and losses from early debt extinguishment and preferred share redemptions; • gains and losses from non-operating assets; and • other miscellaneous items. 45 Table of Contents (3) The Company believes that FFO and FFO available to Common Shares and Units / Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses from sales and impairment write-downs of depreciable real estate and excluding depreciation related to real estate (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Common Shares and Units / Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies. The Company also believes that Normalized FFO and Normalized FFO available to Common Shares and Units / Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the Company’s operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual operating results. FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units do not represent net income, net income available to Common Shares / Units or net cash flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units should not be exclusively considered as alternatives to net income, net income available to Common Shares / Units or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company’s calculation of FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies. (4) FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units are calculated on a basis consistent with net income available to Common Shares / Units and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares/preference units in accordance with GAAP. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the “Noncontrolling Interests – Operating Partnership”. Subject to certain restrictions, the Noncontrolling Interests – Operating Partnership may exchange their OP Units for Common Shares on a one-for-one basis. Item 3. Quantitative and Qualitat ive Disclosures About Market Risk The Company’s and the Operating Partnership’s market risk has not changed materially from the amounts and information reported in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk , to the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021. Item 4. Controls and Procedures Equity Residential (a) Evaluation of Disclosure Controls and Procedures: Effective as of September 30, 2022, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in its Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. (b) Changes in Internal Control over Financial Reporting: There were no changes to the internal control over financial reporting of the Company identified in connection with the Company’s evaluation referred to above that occurred during the third quarter of 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ERP Operating Limited Partnership (a) Evaluation of Disclosure Controls and Procedures: Effective as of September 30, 2022, the Operating Partnership carried out an evaluation, under the supervision and with the participation of the Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer of EQR, of the effectiveness of the Operating Partnership’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Operating Partnership in its Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. 46 Table of Contents (b) Changes in Internal Control over Financial Reporting: There were no changes to the internal control over financial reporting of the Operating Partnership identified in connection with the Operating Partnership’s evaluation referred to above that occurred during the third quarter of 2022 that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting. PART II. OTHER INFORMATION Item 1. Lega l Proceedings As of September 30, 2022, the Company does not believe there is any litigation pending or threatened against it that, individually or in the aggregate, may reasonably be expected to have a material adverse effect on the Company. Item 1A. R isk Factors There have been no material changes to the risk factors that were discussed in Part I, Item 1A of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021. Item 2. Unregistered Sales of Equi ty Securities and Use of Proceeds During the quarter ended September 30, 2022, EQR issued 6,572 Common Shares in exchange for 6,572 OP Units held by various limited partners of ERPOP. OP Units are generally exchangeable into Common Shares on a one-for-one basis or, at the option of ERPOP, the cash equivalent thereof, at any time one year after the date of issuance. These shares were either registered under the Securities Act of 1933, as amended (the “Securities Act”), or issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act and the rules and regulations promulgated thereunder, as these were transactions by an issuer not involving a public offering. In light of the manner of the sale and information obtained by EQR from the limited partners in connection with these transactions, EQR believes it may rely on these exemptions. Item 3. Defaults Up on Senior Securities None. Item 4. Mine Saf ety Disclosures Not applicable. Item 5. Other Information None. Item 6. Exhibits – S ee the Exhibit Index. 47 Table of Contents EXHIBI T INDEX The exhibits listed below are filed as part of this report. References to exhibits or other filings under the caption “Location” indicate that the exhibit or other filing has been filed, that the indexed exhibit and the exhibit referred to are the same and that the exhibit referred to is incorporated by reference. The Commission file numbers for our Exchange Act filings referenced below are 1-12252 (Equity Residential) and 0-24920 (ERP Operating Limited Partnership). Exhibit Description Location 10.1 Amendment to the Equity Residential Supplemental Executive Retirement Plan, effective as of October 1, 2022. Attached herein. 31.1 Equity Residential – Certification of Mark J. Parrell, Chief Executive Officer. Attached herein. 31.2 Equity Residential – Certification of Robert A. Garechana, Chief Financial Officer. Attached herein. 31.3 ERP Operating Limited Partnership – Certification of Mark J. Parrell, Chief Executive Officer of Registrant’s General Partner. Attached herein. 31.4 ERP Operating Limited Partnership – Certification of Robert A. Garechana, Chief Financial Officer of Registrant’s General Partner. Attached herein. 32.1 Equity Residential – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Executive Officer of the Company. Attached herein. 32.2 Equity Residential – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Robert A. Garechana, Chief Financial Officer of the Company. Attached herein. 32.3 ERP Operating Limited Partnership – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Executive Officer of Registrant’s General Partner. Attached herein. 32.4 ERP Operating Limited Partnership – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Robert A. Garechana, Chief Financial Officer of Registrant’s General Partner. Attached herein. 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). 48 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EQUITY RESIDENTIAL Date: October 28, 2022 By: /s/ Robert A. Garechana Robert A. Garechana Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: October 28, 2022 By: /s/ Ian S. Kaufman Ian S. Kaufman Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) ERP OPERATING LIMITED PARTNERSHIP BY: EQUITY RESIDENTIAL ITS GENERAL PARTNER Date: October 28, 2022 By: /s/ Robert A. Garechana Robert A. Garechana Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: October 28, 2022 By: /s/ Ian S. Kaufman Ian S. Kaufman Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)